Mortgage subject to house being habitable

Frankie19

Hello. Just looking for some advice.

We are looking at purchasing a house that was built just before the crash. The house is finished in terms of plumbing , electrics,painted e.t.c however there no fixtures and fittings such as kitchens and bathrooms.

We are in the process of being approved for a mortage of a lot less than the asking price of the house thanks to some equity in our current house. We would be funding the difference of the asking price and works needed using our equity through the sale of our existing home.

Our mortgage lender has come back to say the house needs to be habitable ie have a kitchen and a bathroom fitted. How would we do this as contracts e.t.c wouldn't be signed until mortgage draw down?

I would understand if we were relying on mortgage to fund but surely as we are using equity to fund works this shouldn't be an issue?

Any advice is appreciated as starting to lose hope of ever getting a mortgage on this property.

Cuddlesworth

House has been empty for over a decade?

Frankie19

Yep. Developer was in a position to sit on them during the recession to hold out for a higher asking price. He only put them back on the market a year ago when things picked up.We have had a full structural survey done and all is perfect from that aspect.

Trasna1

Frankie19 wrote: »

Hello. Just looking for some advice.

We are looking at purchasing a house that was built just before the crash. The house is finished in terms of plumbing , electrics,painted e.t.c however there no fixtures and fittings such as kitchens and bathrooms.

We are in the process of being approved for a mortage of a lot less than the asking price of the house thanks to some equity in our current house. We would be funding the difference of the asking price and works needed using our equity through the sale of our existing home.

Our mortgage lender has come back to say the house needs to be habitable ie have a kitchen and a bathroom fitted. How would we do this as contracts e.t.c wouldn't be signed until mortgage draw down?

I would understand if we were relying on mortgage to fund but surely as we are using equity to fund works this shouldn't be an issue?

Any advice is appreciated as starting to lose hope of ever getting a mortgage on this property.

The only way to do it would be to ask the vendor to provide the bathroom and kitchen and include the cost in the sale price. If you fund the works directly before sale is completed you take on a substantial risk as the sale could fall through.

The risk is less for the vendor to do it because it makes the property more valuable and opens it up to more potential buyers.

That said, to be honest, I'd probably pass up the house, too much hassle - or get mortgage approval from someone else.

dubrov

Try another bank. Some will only deal with mortgages for finished houses.

mickdw

I'd ask if I could get into house and install a crap sink unit with 2 taps and a toilet and handbasin.
No tiles, no kichen Units. A few hundred total.

Cuddlesworth

It would be unusual for a house to be left empty that long to not have significant problems.

Get a firm quote and timeline for the remaining works. The bank is probably worried about the time to do the work, your living arrangements during that time and funds required to bring the house up to spec.

Frankie19

Thanks Trasna1. Certainly is proving to be a lot of hassle. Developer is selling them as seen but il have a chat with the estate agent as this must have come up before. A number of the houses have sold in recent months so I'm sure it's come up. We were warned by the estate agent at the beginning that banks were refusing to fund finishing the houses using the mortgage so thought we would be ok with our equity.

Frankie19

Cuddlesworth wrote: »

It would be unusual for a house to be left empty that long to not have significant problems.

Get a firm quote and timeline for the remaining works. The bank is probably worried about the time to do the work, your living arrangements during that time and funds required to bring the house up to spec.

Have a quote for the remaining works which includes kitchens and bathrooms which proves our equity covers it and about a 3 week time to finish.

Frankie19

mickdw wrote: »

I'd ask if I could get into house and install a crap sink unit with 2 taps and a toilet and handbasin.
No tiles, no kichen Units. A few hundred total.

That thought had crossed my mind!

The_Conductor

mickdw wrote: »

I'd ask if I could get into house and install a crap sink unit with 2 taps and a toilet and handbasin.
No tiles, no kichen Units. A few hundred total.

+1
Any old crap- just show the surveyor that they're plumbed and running- nothing more, nothing less. If you hop on Freecycle you may pick up the stuff gratis.

Cuddlesworth

Frankie19 wrote: »

Have a quote for the remaining works which includes kitchens and bathrooms which proves our equity covers it and about a 3 week time to finish.

The house has been empty for 10 years, if its just kitchens and bathrooms you would be very lucky.

Newoven

We bought a house last year that requires complete refurbishment. It doesn't have a central heating system, there's no insulation, the windows and doors are rotten and the general condition is very poor. We were funding the purchase with cash and a mortgage of approximately 60%. The bank's valuer agreed that the price we paid was correct but he ticked the box saying the house is uninhabitable in his report. That triggered a requirement from the bank that we arrange a formal structural survey and that was positive about the fundamentals of the property. As it's the purchaser who retains and pays the surveyor we requested he include some comments on the potential of the house once refurbished and he was happy to do that.

The bank then asked for details of our plan to refurbish including the costs and general specifications, plus a timetable for completion and an indication of the phased payments we would be making to contractors and consultants. We asked an architect friend to give us a standard estimate for the works (on headed paper for added authenticity) required and added a 15% contingency to show we were aware of the potential of overruns and had budgeted for it. We also pointed out that the work was exempt from planning permission as we wanted to eliminate any concerns the bank might have about the viability of the project. We forwarded these documents to the bank's valuer so he could reissue his valuation report taking the proposed works into account. I added some references to other houses in the area that were for sale or had sold to indicate that our expenditure was appropriate and he agreed by projecting a finished value = our purchase price + the proposed budget for refurbishment. This satisfied the bank that its investment was safe and the documents from the architect seemed to convince them that we had professionals involved.

We had to demonstrate where the refurbishment funds were coming from to the bank and after some back and forth they agreed to issue the mortgage less a 10% retention until the works are complete. If that retention is a problem then maybe adjust your required borrowing amount upwards a little....

All that took several months but that was partly because we were green about what would be required and the bank was very slow in processing our documentation. We also made the mistake of dealing only with the branch people - we should have gone to the relevant head office department early on so mistakes and misunderstandings could have been avoided. Our bank has central mortgage department who do the real decision making and once I started talking directly to them things moved on rapidly.

The final fly in the ointment came when we needed to get insurance for the property - the bank insisted that it is insured against fire before they issue the funds, and that their interest in the property is noted on the policy, but regular insurance companies don't quote for properties like ours which is both uninhabited and may never have been properly rewired or plumbed. We asked the estate agent to ask the current owners who they got their insurance from and they told us about a specialist company that insure these sort of buildings against fire at a price. Once we bought that policy the bank issued the funds.

So I'd say from our experience what you want is probably doable, as long as your bank is not completely closed to it, but it takes time and paperwork. I recommend you talk to the bank's central mortgage department and try to get someone with decision making power to tell you straight what is needed and then go get it. Best of luck.

Frankie19

Thank you so much for that info newoven. All of the above is doable from our side and some of it has already been done such as survey and estimation of works. We are currently dealing with the lenders head office on our mortgage as it is and due to meet t them this week so will definitely propose the above to them.

the_syco

Frankie19 wrote: »

We are looking at purchasing a house that was built just before the crash.

Frankie19 wrote: »

Developer is selling them as seen

Frankie19 wrote: »

Have a quote for the remaining works which includes kitchens and bathrooms which proves our equity covers it and about a 3 week time to finish.

Get the house surveyed.

I'd say you'll probably need the house re-plumbed and rewired, as I'd say the place has been striped of copper pipes, and any thing else that has copper in it, such as electrical cable.

Frankie19

the_syco wrote: »

Get the house surveyed.

I'd say you'll probably need the house re-plumbed and rewired, as I'd say the place has been striped of copper pipes, and any thing else that has copper in it, such as electrical cable.

Yeah have had this looked at.All ok but some wires hanging out of walls that need to be sorted. Have the contact details of the companies that originally did the works when house was being built. Boiler was stolen a few years back but was replaced.

Odelay

the_syco wrote: »

Get the house surveyed.

I'd say you'll probably need the house re-plumbed and rewired, as I'd say the place has been striped of copper pipes, and any thing else that has copper in it, such as electrical cable.

They've had a structural survey done. I'd think the surveyor would have noticed copper pipes and wires ripped out.

Eireann81

I was in a very similar position last year. Got a quantity surveyor to provide a written, detailed estimate of remaining works required and added a 12% contingency.

The bank agreed to lend but held back some funds until the house was finished. We also had to get "house under construction" insurance before the bank would release the funds.

The worry for the bank is that if you default on your payments, they'll end up stuck with an unfinished property. Your job is to ease those worries, and back up your claims with as much evidence as possible.

Each bank will have their own rules when it comes to lending for unfinished properties. Best of luck with it anyway.

Cuddlesworth

Odelay wrote: »

They've had a structural survey done. I'd think the surveyor would have noticed copper pipes and wires ripped out.

That's some flawed thinking. Property surveyers are not magical all knowing beings. They go in, look the place up and down and basically state their is nothing obviously wrong from their perspective. Which is incredibly limited, because they can't see behind walls. They are there as a check for banks to spot severe structural issues that could affect the LTV negatively.

Its been 10 years empty. There would be no services connected.

If a family of rats/mice moved in and started chewing the stud walls to bits, who notices?
If a leak in the roof happened and destroyed the wooden supports, who notices?
If somebody came in and ripped out wires, plumbing. Who replaced it, repaired the damage done(they don't come out easy), enabled the services and checked all the replacement wiring/plumbing to check for leaks or screw ups?

How do you know the builder didn't just put up new plasterboard over structure problems and paint the walls, selling as seen? Its really easy to just cover over problems on the cheap. I have seen some serious horror storeys when the walls came down.

When the heating does come on, after 10 years, how do you think the plaster walls will react to drying out. What do you think is growing on 10 years of damp cold internal walls and floors?

Property surveyor doesn't know.

The OP should be getting the house at a steal. But they should be aware, there is a good chance the house will need a serious gut and replace, not just a bathroom/kitchen fit.

Frankie19

Cuddlesworth wrote: »

That's some flawed thinking. Property surveyers are not magical all knowing beings. They go in, look the place up and down and basically state their is nothing obviously wrong from their perspective. Which is incredibly limited, because they can't see behind walls. They are there as a check for banks to spot severe structural issues that could affect the LTV negatively.

Its been 10 years empty. There would be no services connected.

If a family of rats/mice moved in and started chewing the stud walls to bits, who notices?
If a leak in the roof happened and destroyed the wooden supports, who notices?
If somebody came in and ripped out wires, plumbing. Who replaced it, repaired the damage done(they don't come out easy), enabled the services and checked all the replacement wiring/plumbing to check for leaks or screw ups?

How do you know the builder didn't just put up new plasterboard over structure problems and paint the walls, selling as seen? Its really easy to just cover over problems on the cheap. I have seen some serious horror storeys when the walls came down.

When the heating does come on, after 10 years, how do you think the plaster walls will react to drying out. What do you think is growing on 10 years of damp cold internal walls and floors?

Property surveyor doesn't know.

The OP should be getting the house at a steal. But they should be aware, there is a good chance the house will need a serious gut and replace, not just a bathroom/kitchen fit.

It was a structural engineer along with our own builder who will be doing the works that have surveyed it. The banks property surveyor has yet to go in. 4 houses have gone in the last few month's and talking to the new owners they haven't come across any issues. What it needs is

New insulation in attic and new tank
Walls need to specially cleaned before being repainted
Floors
Kitchen
Tiles
Plumping upstairs in one bathroom needs to be redone
Electrics need to be tidied up. Is wired for speaker systems e.t.c but we will be removing.

When first sold in the height of the boom these house were going for 800k. We will be paying less than half that

Why we are looking at this house is because of the size of the garden and rooms are much bigger than our current house. As we have equity in our house (We bought in 2010) we can move to a bigger house for the same repayments and not adding a longer term to our mortgage.

Will know today or tomorrow of bank will except the suggestions above to submit quotes and timelines e.t.c to get around the non habitable issue. If not we will just forget about it and stay where we are.

Sausage dog

We bought a house with our own funds & then needed a mortgage to add to savings to renovate it. Loan to value 50%. It was a complete gut job. Bank wanted not just estimates on work done & prices but actual contract prices from builder before proceeding. It was a very long, time consuming process, where they changed the goal posts as we went along. Arranging the stage payments was a minefield as it was a renovation & extension. It was like they had never given a mortgage for this before, such was the rigmarole. Half way through they changed the final stage drawdown amount...in their favour of course. Be prepared for all of this, unless things have changed in the last year or 18months.

Sausage dog

Just to add...from my experience a structural survey will only address issues the surveyor can see. Usually they can't pull walls apart or poke holes in ceilings, check insulation in floors etc. to examine these areas. If you read the report carefully there is usually a line or two in it where they cover themselves against all unseen issues or problems. As you've mentioned, it's a good idea to talk to others in same estate that have done similar and see what issues they have faced. Best of luck.

Frankie19

Yeah just spoke to bank. Surveyor will value works and reference check against our quote.they will then withhold that amount at drawdown untill they inspect once finished. Fair enough....At least they were willing to be open to it and not point bank refuse.

Our hopefully new next door neighbours have knocked walls and are converting attic currently. They haven't come across anything yet but will keep us updated if they do.


Our engineer did say he was surprised at the condition of them considering they have been empty for 10 years. Said they are clearly well made and even some new builds he would see wouldn't be as well built. Developer is local to the area as well and didn't do a runner during the recession like most of them.