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Delay in Refurb Project - Need Remortgage Advice


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Hi all,

 

I need a bit of advice around remortgages. I'll set the scene for you first:

 

- 3-bed, first-floor tenement flat in Marchmont, Edinburgh (the ones with the high ceilings, ornate cornicing, and bay windows)
- bought in Nov 2014 as a dingy student flat, which we've been living in and renovating simultaneously (not recommended) to a very high spec.
- remaining work is sanding and painting window and door woodwork, lining and painting the walls/ceilings, putting down carpet, and attaching new light fittings, curtains, and maybe some small other bits
- fixed rate on residential mortgage is expiring Dec 2016.
- absolutely need to have the remortgage funds available in my account by end of Mar 2017.

 

The project is almost finished, at which point we will seek to remortgage. There is a big risk we will not be able to get everything done by end of Feb 2017 (my drop-dead date) since I'm doing almost all of the work myself (while working full-time!). We've also run out of money to hire anyone.

 

Ideally I would be able to finish everything by Feb and remortgage to the full amount with a completed property. But I fear this won't happen and I will have to remortgage in Feb in whatever state the property is in at that time (possibly not the full value but still an acceptable increase based on my research and financial requirement).

 

Yes, I'm nuts!

 

My questions are:

1. what kind of things can we delay that won't impact the revaluation? E.g. would it be an issue if there are no curtains? What about cheap light fittings instead of fancier ones (for the time being)?

 

2. are valuers likely to see that we're almost done and just do things based on a completed property?

 

3. if we remortgage with a partially completed renovation, is it just the 6 months we have to wait before we can apply for another revaluation?

 

4. our credit reports are very good, will there be significant negative impact to the remortgage if we got some of the things done on credit?

 

5. how important is it that we present before and after photos of the work we have done to the valuer? How about local price research data? Or amounts we have spent on the work?

 

6. in general - what would you do in this situation?

 

I appreciate some of you might not answer every question, but anything you can would be appreciated.

 

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Why do you have to remortgage?

 

I don't know obviously, but usually the end of the fixed rate will just mean you go onto the lenders SVR (Standard Variable Rate). So sure the costs per month will go up, but you can just suck it up, pay an extra few hundred quid until the works are completed, then refinance without any difficulties or questions. 

 

But if for whatever reason that's not a thing......

 

  1. Valuer probably won't care about curtains, painting the walls and ceilings, light fittings.
  2. If it's just final decoration then it's unlikely to be considered 'incomplete' so you should get a fairly full valuation. Worst case they may ask for a retention while you finish off the last bits and pieces, but doubt it.
  3. The 6 month rule relates to completion date not refinance date. You can refinance every 8.49 minutes if you want, but that'd be a daft thing to do.
  4. Nope, so long as you meet all of the affordability once you include the cost of these loans - if you tell them you'll be using the refinance money to consolidate and reduce the loan cost, then it shouldn't be taken into account anyway. 
  5. Some valuers like this, others despise it and see it as you trying to trick them. If you have them available to show the work you've done, that will be fine. But it's been 2 years, they'll value you it on it's own merits at this point.
  6. If it was me I'd speak to the current lender and explain the situation, then let it lapse onto the SVR when the mortgage term came to an end, then refinance to the best rate once all the works are done. Failing that, I'd whack it on a credit card and get the works finished with some additional labourer and get it refinanced at the end of the deal term. 

 

Damien Fogg
MRICS CeMAP CeFA

Email: damien@theepinvestor.com

Web: www.theEPinvestor.com

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Thanks for your answers!

 

I think I might have been a tad confusing: the remortgage is for releasing the additional equity rather than renewing a mortgage product.

 

I'm dealing with a mortgage broker at the moment who will be looking for the best deal. I think I'll go on SVR and go hunting for a new credit card to complete everything, then jump on the new valuation/remortgage at the very end.

 

Thanks again!

 

 

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