Best route for extra borrowing?

Polly

We can't sell so want to extend our house as we'd like more space. Everyone seems to think that this is the time to build as the construction industry is slack and labour and material costs have gone down. Is this the case? We need to borrow about £40K and already have £30K outstanding on our mortgage and estimate that our property is worth about £170K. When we borrowed extra before for some home improvements, Nationwide wouldn't let us add this to the mortgage and instead we had two products running alongside each other with the 'Further Advance' on the variable rate, which was not ideal. This has now been repaid in full and we just have the outstanding mortgage with them. Can I go elsewhere and get both the existing mortgage and new borrowing combined into one product?

dimbo61

If your existing mortgage is not in the middle of a fix with early repayment charges you can look for a new lender and borrow the extra to extend.
Think long term interest rates are very low ( 5 year fix )
HSBC 4.24% fee £899 Post Office 4.45% Fee £599

opinions4u

Polly wrote: »

We can't sell so want to extend our house as we'd like more space. Everyone seems to think that this is the time to build as the construction industry is slack and labour and material costs have gone down. Is this the case?

It is. But you may be wise to investigate insurance against a builder going bust half way though the work! I've no idea if such policies are readily available!

You would also be wise to ensure clear release of funds clauses are agreed with both lender and builder. You don't want to hand over your £40k half way though the work and have his business collapse leaving you with a half finished extension!

We need to borrow about £40K and already have £30K outstanding on our mortgage and estimate that our property is worth about £170K. When we borrowed extra before for some home improvements, Nationwide wouldn't let us add this to the mortgage and instead we had two products running alongside each other with the 'Further Advance' on the variable rate, which was not ideal. This has now been repaid in full and we just have the outstanding mortgage with them. Can I go elsewhere and get both the existing mortgage and new borrowing combined into one product?

Yes. Ask what Nationwide would offer you. Shop the market at places like www.moneyfacts.co.uk or see a whole of market mortgage adviser! Then make a decision!

Daily Mail Article

Daily Telegraph Article

Warranties (I can't vouch for the company providing them and haven't read their information in any depth)

Polly

Many thanks for the advice. I've been on to Nationwide and again have been told that they can't combine the two so I will have to go to another lender. Their deal wasn't particularly special either - 6.64% for a 5 year fix. Don't think existing borrowers are getting the best deals with them at the minute. A bit worried about the builder going bust issue - I hadn't thought of that one but of course its happening all round.

dimbo61

Consider an offset mortgage !!
You borrow all the money you need to clear your existing mortgage and the extra to pay for the building works.
Then put the extra money into the offset account until you need it and pay your builder in instalments as parts of the job are done.
Ie if £6,000 WORTH OF BUILDING SUPPLIES ARRIVE AT YOUR HOME GIVE HIM/HER A CHEQUE FOR £6000.
The offset money is saving you interest until you need it.

Polly

I hadn't considered an offset mortgage, probably because I don't trust myself with access to all that cash! It's definitely worth considering so I'm searching the market at the moment. Would be great to have some feedback on how these are working out for others and tips to get a good deal.

dimbo61

I have an offset fixed mortgage with YBS and very happy over the last 4 years.
Keep all the spare cash in the offset account and can pay cash for anything I buy then replace the money back into the offset.
Have been overpaying and gross payments
Look on the Yorkshire building society website.