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  • FIRST POST
    davidw691
    help with additional borrowing for extension
    • #1
    • 7th Jan 11, 5:50 PM
    help with additional borrowing for extension 7th Jan 11 at 5:50 PM
    hi ,not sure if this is the right place to post this question but here goes!
    i am having a 2 storey extension built and need some advice about the best way to finance the 25K i need for the build!
    i have applied to my existing mortgage company for the additional amount but they valued my house less than i was hoping for, so have only offered me 14K
    out of the 14K i need to use 2K to pay off an existing loan
    saving me 180 per month
    my current mortgage deal is fixed for another 3yrs and i have 23 years remaining at 350 a month

    to make up the short fall i want to get a personal loan of 13K
    to afford this i need to decrease my mortgage, my budget is 550 per month
    i can reduce my mortgage payments in 2 ways and am not sure which will be best option-

    1, increase the term of my mortgage and additional borrowing of 14K to 30 yrs to bring down payments to 382 a month

    2, change my mortgage payments to interest only which would be 300 per month

    i plan to remortgage in 3yrs time when the fixed term is up and to consolidate the 13K loan into the new mortgage
    any help here would be much appreciated as i have an impatient wife here who just wants her new extension built yesterday
Page 1
    • Thrugelmir
    • By Thrugelmir 7th Jan 11, 6:11 PM
    • 48,513 Posts
    • 40,406 Thanks
    Thrugelmir
    • #2
    • 7th Jan 11, 6:11 PM
    • #2
    • 7th Jan 11, 6:11 PM
    1, increase the term of my mortgage and additional borrowing of 14K to 30 yrs to bring down payments to 382 a month

    2, change my mortgage payments to interest only which would be 300 per month
    Originally posted by davidw691
    Have you approached your lender to see if either option is available?

    You may well need to supply details of how you intend to repay the capital balance to get agreement to option 2. So you'll be no better off in cashflow terms.

    If you are struggling to repay 2k of debt. Is borrowing an additional 25k a sensible idea? Interest rates are only going in one direction.
    "A man who wishes to remove a mountain begins by carrying away the smallest stones first."
  • davidw691
    • #3
    • 7th Jan 11, 6:26 PM
    • #3
    • 7th Jan 11, 6:26 PM
    hi Thrugelmir, yes i spoke to my lender earlier today and both options are available, i just dont fully understand which option is financially better for me in the long run
    the 2K loan isnt a hardship as such i just want to pay that off to free up the 180 a month outgoing to go towards paying a new loan
    • hcb42
    • By hcb42 7th Jan 11, 11:23 PM
    • 5,742 Posts
    • 3,456 Thanks
    hcb42
    • #4
    • 7th Jan 11, 11:23 PM
    • #4
    • 7th Jan 11, 11:23 PM
    dont increase your term, dont go interest only.

    save and do the work when you can.
    • Joe_Bloggs
    • By Joe_Bloggs 8th Jan 11, 7:44 AM
    • 4,313 Posts
    • 1,531 Thanks
    Joe_Bloggs
    • #5
    • 8th Jan 11, 7:44 AM
    • #5
    • 8th Jan 11, 7:44 AM
    I could be wrong but with short days and freezing temperatures it might not be the best time to start borrowing for a building project on your home. I would not want to live on a partial building site in the winter months.

    Spend less so you can save up/pay off your loans. You may need additional reserves of cash to complete this project in the event of things going wrong.

    J_B.
    OFT work merger decisions 2012:- MSE too small to be worth financial consideration ?
  • opinions4u
    • #6
    • 8th Jan 11, 8:27 AM
    • #6
    • 8th Jan 11, 8:27 AM
    Did the lender value the house in present condition or imroved condition (after the extension is built)?

    Some lenders will lend against the improved valuation.

    It may be worth seeing a broker and working out if, with penalties, it is actually worth changing lender to achieve this.

    That said, a few months of hard saving can move you towards your objective!
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