Can my Mortgage Include the Cost of Renovation?

Many properties bought at auction are in need of repair. This is due to a number of reasons – reasons which explain why the property is up for auction in the first place. If the house is in disrepair obviously you will not be able to move straight in but, moreover, you will have to pay extra to get the house repaired. This may make some sellers decide that the price of the house will cover the cost of the repairs too. However this is not always the case and often the buyers may be fooled. It is therefore vital that you make sure you know what is included in the cost of the property and don’t just make assumptions.

Why Is The Property Up For Auction?

Properties at auction usually sell quickly. The sale is completed with 28 days and since the sale is a binding contract there is less chance of buyers trying to pull out. For this reason sellers who want to sell the house quickly and easily often chose auctions as the way to go – even though there is a commission involved.

Why Might It Be In Need Of Renovation?

The reason the seller wants a quick sale is often because the house is not theirs. For example lenders may want a quick sale for houses they have repossessed. It is not part of the lenders business to own houses so they want to get rid of them quickly. Alternatively the house may have been owned by an older relative who has died and the family decide to sell on the property rather than keep it. Selling at auction is the quickest way to do so. Perhaps a couple has got divorced and they decide the best thing to do is to sell the property quickly and easily and so decide to do it through auction. If houses are not lived in for sometime then they may well be in need of a lot of renovation.

Does The Price Include The Renovation?

Many sellers who want to make the property more attractive to buyers will include the cost of renovation in the cost of the property. If this is the case it is important to get quotes from builders to make sure the cost will be covered. Do not assume this is the case though. Make sure you ask the auction house if the price of renovation is included in the price of the property. You do not want to find yourself paying out for something you thought was included.

If Not Can My Mortgage Cover It?

If the price of the renovation is not included in the cost of the property then you will need to organise alternative finance. Some mortgages include extra funds to cover renovation however considering the current threat of recession this may not be the case. Borrowers are struggling to get an ordinary mortgage let alone any extras. Therefore the best option is a home improvement loan. These are available through most lenders and your broker should be able to help to organise this. The loan will help you complete all the repairs needed for the property. Once again though, make sure the cost is not included in the price of the house as this could save you a lot!