Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • 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
    • 47,840 Posts
    • 39,853 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
    • 5,726 Posts
    • 3,431 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!
Welcome to our new Forum!

Our aim's to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,481Posts Today

6,576Users online

Martin's Twitter
  • RT @WaterWatchdog: More than 250,000 consumers used our water meter calculator in 2015/16 - thanks in no small part to this man.... https:/?

  • A phrase I never thought I'd read, "George Clooney plays Lee Gates, a brash version of our Martin Lewis" - Sun's review of Money Monster.

  • RT @BeautyMeSurrey: @MartinSLewis sainsburys offer is back working!! Thank you!

  • Follow Martin