Further Borrowing for extension.

fazsi

I am curently in the situation of needing a larger home - extra child!! - and for the space i need this would require spending £200k+ on a new house (which frankly i cannot afford)!
I currently have a 2 bed house and had plans drawn up to extend to 4 beds, also creating extra reception room.
The problem i have is that mortgage lenders will not lend to the level i need for the extension (£60k).
My home is valued at £145k and i owe £100k. The value of the improved home would be c. £200k, though in effect i would have only paid £160k for it. Why wont lenders take this into account?? Help please i am becoming very frustrated!!

beecher

Are you sure that spending £60k would add £55k to the value?

opinions4u

£60k spend.

Minus VAT.

Minus loss of garden space.

Whatever you do will rarely add anything like the cost to the value of the house.

Lenders will usually be prepared to value a property based on current value and improved value and release funds for improvements as and when those improvements are completed.

But if a £60k spend only adds £40k to the value of the house, they will take this new value in to account.

I am curently in the situation of needing a larger home - extra child!! - and for the space i need this would require spending £200k+ on a new house (which frankly i cannot afford)!

What leads you to believe you could afford to pay back the money borrowed against your existing house that you value at £200k improved?

beecher

Say you sold your present house for £145k and bought a new one at £200k. You'd have a deposit of around £40k (5k fees)and a mortgage of £160k. This would cost you the same amount.

As opinions4u says, why do you see one scenario as more affordable than the other when they cost they same amount?

fazsi

The average value of houses with 4 bedrooms and 2 receptions etc in my area is over well 200k. The only houses in the 200k bracket are 3 bedroom or larger if they are wrecks. They do not cost the same amount for this very reason - i would end up with a 4 bed house not a 3 bed, manage to stay in location which is 1 min from my sons school, plus save on solicitors fees stamp duty etc.
I understyand the reasoning behind the way the figures look, however. Guess i just dont want to move but cant afford to extend!! Bummer!