Pay Mortgage or Increase House Value?

bubzy1

Hi All,

I would really appreciate your advice on a question we have.

We brought a house a year ago with a 2 year fixed mortgage, which is 85% LTV.


What we'd like by the end of the 2 year term is to have a 80% or better LTV which will give us more options with mortgages.

So the question is should we put that money into repaying the mortgage or should we spend it on a loft conversion?

(thanks Rob, I've updated the LTV)

Rob_192

I wonder if you actually mean what you say - a 15%LTV means you have say a £15k loan on a house worth £100k.

You are saying you want to increase your LTV to 20% to give you more option with mortgages which suggests to be you actually currently have an 85%LTV (£85k mortgage on £100K property) and want to get this down to 80%.

Assuming I'm reading this right, then paying off some of your mortgage is by far the best way of achieving this. Loft conversions are notoriously poor value for money in terms of increasing the value of your home - it would be nothing to spend £50k on a loft conversion only to have it put £20k on the value of the property.

In any case, where's the money for the loft conversion going to come from? If you add it to the mortgage it won't help.

bubzy1

Cheers Rob, we got the house in the same year we got married so kept some money back in case we needed it for the wedding but now its a case of putting it in the right place.

I think we'll probably go down the route of paying of the mortgage, I just thought that the ratio of SPEND to ASSET VALUE would have been more.

murphydog999

We are just currently re-mortgaging and have put £20k we had in premium bonds into the mix. This bought the LTV to 60%, which opened up a whole new world, and will save us £250 a month. Def. worth doing IMHO.