Mortgaging to fund renovation

Goshengareth

I am a newbie. I need some advice.
Situation is I have a mortgage equating to 80% LTV - 300k loan on 375k value. Have an excellent lifetime base rate + 0.5% tracker deal. Paying interest only. It is peanuts.

We want to renovate our house to major effect and would like to borrow up to 100k to do it (total cost will be 160k, but we will use savings for the incremental 60k). Value post renovation will be 600k - but really we will probably live in it forever, so not really abt resale.

Existsing mortgage provider has no interest in lending more as we are already at 80%, and they only base on current value, not estimated. I don't want to get rid of existing mortgage, more find someone who will lend the increment.

Anyone got any smart ideas?

Trying_to_be_good

I'm sure your ideas are great, but you're looking for someone to lend you money when they'd have no security over the property (any charge would be a second charge, and they'll only lend against the real current value of the property) - I can't see that you have any chance in this market based only on the facts you give above.

Thrugelmir

So how do you intend to repay the capital ?

Thats the question the lenders will ask.

TrickyDicky

No one will lend on estimated valuation - what happens if you spend all the money unwisely and in the end its not worth enough to cover the loan?

Caz3121

If you start paying some of the capital as well as the interest this will improve the LTV which, if anything, will be increasing currently
Can you split the work into phases and spend your savings on phase 1 then remortgage based on the new higher value to allow you to continue

richiez

Buildstore.co.uk will find you a renovation mortgage, or you could get a bridging loan, neither options will be particularly cheap.

GMS

Your issue is being at 80% LTV already, too high for bridging finance.

If you could get an estimated valuation and architects plans there may be a chance with a specialist lender but it would not be at high street rates.

You would need to spend your savings initially to get started and then borrow in stages to complete the build.

You need to speak to a broker to see if it would be possible before you spend any cash.

Goshengareth

Thks all.

Yes, phasing the work is one way we are discussing with the builders.

We certainly are getting projected valuations based on drawings / plans to ensure the overall economics of the project stacks up.

Bridging loan is something I hadn't considered, but whilst uneconomic will only be for a short term period as we will be able to remortgage with Barclays once complete as we will obviously only be at 50% LTV at that point.

Re the repayment of the capital, we will be paying off in 10% lump sums as the nature of my work means I receive bonuses. We will leave monthly repayments as interest only.

Thks for all your guidance.

Thrugelmir

Goshengareth wrote: »

Bridging loan is something I hadn't considered, but whilst uneconomic will only be for a short term period as we will be able to remortgage with Barclays once complete as we will obviously only be at 50% LTV at that point.

Thats not a given fact more of an assumption that Barclays will allow IO.

luckyfool

The challenge is to get the borrowing without having to redeem the current Barclays mortgage. If it isn't redeemed then any additional borrowing has to be on a 2nd charge secured loan/bridging basis which will make it a) ridiculously expensive and b) not enough. If you get bridging or a renovation mortgage then the Barclays mortgage will be repaid and you will lose the deal, you can't just remortgage back to them and get your 0.50% over base tracker again.