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    • Spendingqueen
    • By Spendingqueen 11th Sep 17, 7:56 AM
    • 71Posts
    • 10Thanks
    Spendingqueen
    Extension while in Fix?
    • #1
    • 11th Sep 17, 7:56 AM
    Extension while in Fix? 11th Sep 17 at 7:56 AM
    So buying a house 150k and we want to extend 50k to make the property larger.
    Initial mortgage is high interest for 2 year fix
    Is it better to do the extension within the 2 years so that at the end of the period the property will be revalued and hopefully go up to around 180k maybe? That way our LTV is better and our rate should be better? (I realise we have spent more than the worth however this is a long term home for us, houses don't come up in this area and it had potential with the space so we aren't concerned about losing the money in the short term)

    Or would we wait until after the 2 years pay as much as we can to get LTV down and then try borrow some more money to get the work done?
Page 1
    • Caz3121
    • By Caz3121 11th Sep 17, 8:08 AM
    • 10,847 Posts
    • 7,075 Thanks
    Caz3121
    • #2
    • 11th Sep 17, 8:08 AM
    • #2
    • 11th Sep 17, 8:08 AM
    how would you be funding the extension? savings or borrowing?
    • kinger101
    • By kinger101 11th Sep 17, 12:11 PM
    • 3,942 Posts
    • 5,392 Thanks
    kinger101
    • #3
    • 11th Sep 17, 12:11 PM
    • #3
    • 11th Sep 17, 12:11 PM
    Isn't there a 2 yr discounted variable you could go for instead? That should avoid the redemption penalty.
    • Spendingqueen
    • By Spendingqueen 11th Sep 17, 2:44 PM
    • 71 Posts
    • 10 Thanks
    Spendingqueen
    • #4
    • 11th Sep 17, 2:44 PM
    • #4
    • 11th Sep 17, 2:44 PM
    It would be borrowing from family and also some savings.

    No we are on a 2 year fix, that was the best for our solution as there were no fees etc

    What redemption penalty?

    I mean would I be better doing the work before the 2 year comes to an end and I have to remortgage or would it be better waiting till after the 2 years and then doing the work, but then surely with the second option by LTV would still be high whereas with the first and the price increase LTV would be lower and better for rates
    • kinger101
    • By kinger101 11th Sep 17, 3:00 PM
    • 3,942 Posts
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    kinger101
    • #5
    • 11th Sep 17, 3:00 PM
    • #5
    • 11th Sep 17, 3:00 PM
    Er.....you'll have to remortgage when the fix ends. And if the extension hasn't been done, there's no way that this can be taken into account when determining LTV.

    That was kind of the point of me saying don't go for a fix if it's a high interest rate. You can remortgage as soon as the value of the property has increased (without redemption penalty....which is what you pay if you come out of a fix early....typically 2% on a 2 year fix).

    BTW, you'll have to declare any debt to family, and this will be taken into account when determining affordability.

    Spending £50K to increase the value of a property by £30K is asking for trouble IMO. Particularly in the current market. Borrowing money to this is even riskier.

    It's much simpler just to find a property of the right size.
    • Spendingqueen
    • By Spendingqueen 11th Sep 17, 5:02 PM
    • 71 Posts
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    Spendingqueen
    • #6
    • 11th Sep 17, 5:02 PM
    • #6
    • 11th Sep 17, 5:02 PM
    I agree its asking for trouble - We will hopefully be in this house for 20 years - After that time I hope the value has increased to cover the full extension - We have spent 18 months looking for a house and all right size right area ones are out of our budget by a £50 / 60k amount
    This is the second property that has come up in the area we want and we had a bidding war to get the property - 6 sealed bids went in 2 days after it went on the market so it is a popular area.
    • Spendingqueen
    • By Spendingqueen 11th Sep 17, 5:03 PM
    • 71 Posts
    • 10 Thanks
    Spendingqueen
    • #7
    • 11th Sep 17, 5:03 PM
    • #7
    • 11th Sep 17, 5:03 PM
    Er.....you'll have to remortgage when the fix ends. And if the extension hasn't been done, there's no way that this can be taken into account when determining LTV.

    .
    Originally posted by kinger101
    So the process would be do the extension before the fix and when we remortgage get a new value based on the house with new extension - Include family loans when doing affordabiliy
    Thanks
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