extension before re-mortgage?

bar_1

Hi,

we are doing small house extension, porch and larger kitchen. this will include a new (secondhand) kitchen and bathroom (currently very old nasty council kitchen and bathroom).

our 2 year fixed rate mortgage is up in June. we were planning on doing the extension over the summer, so saving a large part of the money up now. but if our house needs to be re-vauled before we re-mortgage I assume it would be better if we have had the work done first so our house it worth more... this would mean getting around £5,000 loan, paying back over 1 year.

Hope that makes sense? can anyone help?

Thank you

samanthat80_2

It should not make a difference if you do not want to increase your mortgage. When I remotgaged the company only did a drive buy valuation, did not want to come in the house, so they did not see any of the work done to the house since we had bought it, purely vlaued it on what they saw from the street.

Dom3663

If your house is worth more (due to the work done) won't this then reduce your LTV when you re-mortgage?

Example
House worth 150k. You have 75k paid off. So a remortgage without work would be 50% LTV.
House after work worth 170k. 75k paid off. Remortgage after work would be 44% LTV.

The smaller your house value the greater the effect this could have

I'd re-mortgage, then get the work done.

dimbo61

Things have changed over the last 2 years in the mortgage market and lenders are more strict over affordability so having a loan and then applying for a re-mortgage might mean you get turned down by some lenders!
Changing the kitchen /bathroom might not add 1p to the value of the property.
It had a kitchen /bathroom before and if drive by valuation who would know you got a new £25,000 kitchen with gold taps.

bar_1

OK...

I was thinking along the lines of negative equity, we brought our house for £130,000, borrowing £115,000. I was concerned that if the house is now worth less, say £110,000. Does that make sense or am I talking nonsense?

getmore4less

Do you actualy need to remortgage in Jun?

What is the follow on rate?

bar_1

Our 2 year fixed rate is up, so ideally we will want to look around for the best deal, I hadn't thought about continuing with our current provider. I am waiting for london and country to contact me about making a start on looking into the best deals.

VIGILANT22

if yr house in now valued at 110k (as stated above) and yr mortgage is 115k!!...no way will you get a deal..........even if yr house is valued at 120k you wont get a new deal...........

Conrad

Vig is right, maximum remortgage loan to value is about 85%, if you want an 'ok' deal, but in likelyhood no lower a rate than your current providers standard variable rate.

Perhaps the home improvements will increase the value and prices are rising fast here in the London area so a remo might be possible in the future.

bar_1

so, it kind of depends on what the value of my house is now as to if it would be beneficial to do the extension now or later.

getmore4less

bar_1 wrote: »

so, it kind of depends on what the value of my house is now as to if it would be beneficial to do the extension now or later.

No. Don't see how you come to that conclusion