Getting to 60% LTV

asc99c

We bought our house late 2007, with a 90% LTV mortgage. We've been paying it off at the normal rate for a 25 year mortgage for 3 years now, but with the decrease in house prices, we're probably still around the 90% LTV position or above. Right now we're on the Nationwide base mortgage rate at 2.5%. I'd like to be able to switch mortgages when the base rate starts to rise, since I assume Nationwide are going to keep their BMR deal at 2% above the base rate. Ideally I'd like to get to 60% LTV to get the best deals.

Been thinking about our options for a while now, but don't seem to be getting any closer to a decision. We've got two kids, and I'm not sure whether I would be better paying off the mortgage, or alternatively, saving up and getting some work done on the house.

We've got a living room currently filled with toddler and baby toys. Growing up, my parent's house had a spare bedroom we used as a playroom, which was great. Our house is on a hill, and we've got room to build an extra floor under half of the house. I'm thinking of getting an extension under the floor, with a playroom for the kids when they're a bit older, and a utility room. At the same, time, we would need to get the garden landscaped, to avoid taking away tons of earth. Also with the landscaping we could add a conservatory from the new lower ground floor.

We've got quotes of around £30,000 to get the building work done (excluding conservatory). What I'm not sure of is how the banks will respond in terms of the value of the property. It would add around 20% extra in raw square footage, on a house worth around £240,000.

We currently owe around £223,000 on the mortgage. Paying off a similar chunk of the mortgage would therefore take us to around 80% LTV.

Is an extension a sensible way of reducing LTV?

Welshlassie

Where would you get the 30,000 to do the extension from is the 1st thing and most important question?

Have you discussed your thoughts with an estate agent to understand how much the extension would actually add in value to the house?

getmore4less

I'd like to be able to switch mortgages when the base rate starts to rise, since I assume Nationwide are going to keep their BMR deal at 2% above the base rate. Ideally I'd like to get to 60% LTV to get the best deals.


Chances are that it is unlikely there will be a better deal than this.

The current leading trackers are around base+2% anyway,
FD have +1.89%

asc99c

The 30,000 is going to be taken from savings / investments. We're over half way there now, hoping to have the full amount saved by April 2011. However, the first phase of the work is around £23,000, so possibly we could start on the work this coming April.

LilacPixie

I think it depends on area, house size already and who your target market would be if you were to sell. Some extensions if well planned can add value, otheres add nothing but extra space for the current and future owners but in money terms not much onto the value.

asc99c

OK, going to speak with our local estate agents about the value.

Regarding the house size, it is a 4 bedroom detached house, but it's built into a hill, so the ground floor living area is a little smaller than the upstairs sleeping area. A lot of similar priced houses when we were looking around had an extra reception room, which was generally used as a playroom.

I'd normally not expect landscaping to add value. However, half of our garden is not much use because it is on a 45 degree angle. We're getting a supporting concrete wall built near the bottom, and filling in the gap with the material taken from under the house. It will allow us to build a patio that should be out of shadow of the house (north facing garden), and have a flat lawn area where the kids can play.

Unfortunately I still suspect LilacPixie may be right - the value added may be substantially less than the money put in.

swingofthings

but one has to think of your quality of life ... if you are not moving any time soon - then use the money for the playroom - if it adds value to the house great, but if it doesn't add 30k to the house value then so what? do you want to move then ? if not, then do it anyway?!

sarahevie

We have the same (house on hill) ours is only 3 bed terrace (block of three) .

We love our location but our garden although HUGE is so not useable, also with a growing family we would like extra space so looked into extending.

Long and short of it is we cannot afford to but the final nail in the coffin was 'expensive build' due to location (hill) not reflected in house price increase.

asc99c

In our house, you can get into a crawl space under the floor in the middle, but by the edge of the house, it's actually head height. You can get a room around 14x10 ft with a door to the garden with little work involved, but of course that wouldn't be that much use!

Good going on your mortgage overpayments also Our kids are born Nov 08 and Aug 10 and my wife is now a full time mum also - we've only just got used to living on one salary! Was going to start my own full blown MFW post here but thought it might be a bit ambitious until at least one of the kids is in school.