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Can we use part of the mortgage to pay for repairs?

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  • Can we use part of the mortgage to pay for repairs?

    Hi, we have just had a building survey completed on the house we're intending to buy. It highlighted some hidden issues which we could not have known about before. They are not so significant that we want to walk away from the purchase, but definitely need correcting.

    We have asked the vendor's agent if, in light of this, they would be prepared to make a reasonable reduction to the purchase price. If so, then we can get specialists round to review and provide estimates.

    My question is about how the repairs are then funded. We have already fully agreed our mortgage. If we agreed a reduced price with the vendors, would we have to go back to our mortgage lender to reduce the amount of money we're borrowing?

    Or could we stick with the agreed amount with the lender, pay the reduced price to the vendors and keep the balance to pay for the repairs required (or whatever portion of the costs we can agree with the vendors)?

    We're not sure at all how this works, so any advice would be appreciated! Thanks

  • #2
    Re: Can we use part of the mortgage to pay for repairs?

    The answer to this depends on the amount of your deposit.

    The mortgage that you have applied for will have a maximum percentage amount that you can borrow against the purchase price. If you are already borrowing that maximum limit then the lender will have to reduce the amount of borrowing to ensure that the percentage is not exceeded when compared against the new, reduced price.

    eg - if your mortgage is restricted to 90% of the property value and you had originally applied to borrow £90,000 against a property which you were buying for £100,000 you would not be able to still borrow £90,000 if the price dropped to £95,000 as this would then be 94.7% of the new purchase price.

    You need to speak to your lender / adviser and explain the situation and they will calculate for you what your maximum borrowing is against the newly reduced price.
    ____________________________________________
    Property for sale in Torquay

    www.thomasdobner.co.uk

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