Moving House Dilema

clickoxford

I have a mortgage for £60K (with 14 years to run) on a house worth £180K and am looking at one similar size house worth £190K which has planning permission for a 2 storey extension, giving plenty more room for my family. My dilema is this: (a) How do I approach the building society to lend me just enough to cover the costs of the extension and (b) Do I have a right to see detailed plans from the vendor? (c) I can afford to increase my mortgage payments by £300 per month if necessary so would I be sensible to increase the term?

Debt_Free_Chick

Assuming you sell your house for £180k you would have £120k equity. You can simply retain some of this as cash to fund the extension .... let's call it £50k (but get proper estimates/quotes!). So you would then put a deposit of £70k on the new house and get a mortgage for £110k - as this is less than 60% of the value of the new property (assuming it is valued at £190k) then I don't think you'll be in any way restricted by mortgage offers. What I mean is .... you tend to get better deals anyway, if you are borrowing less than 80%. (Note that all of this assumes you do not need to fund any moving costs out of your equity and that you have savings to cover all those costs. If not, you'll need to deduct the costs from the equity and get a higher mortgage).

I can't see any reason why the vendor would not share the plans with you. In any event, you can probably view them on the local authority website as planning applications are "public" documents. If you can't view them online, you can visit the planning office and view them - but there might be a charge for a copy. However, it would be in the vendor's interests to give you a copy of the plans, after all he is using the PP as a selling point.

As you will almost double your mortgage to fund the cost of the extension, you might want to rework your figures to see if you still have an extra £300. If so, reducing the term seems sensible, if you want to be mortgage free as soon as possible. The alternative is an offset mortgage where you put £300 each month into a "linked" savings account and the amount in that account is deducted from the outstanding mortgage. However, offset mortgages tend to have higher interest rates. Or, look at a flexible mortgage which allows you to overpay - either monthly, or a lump sum once each year. What out for any limits on the amount you can overpay!

HTH