advice on negative equity situation

mrsmiggs1979

We currenly have a mortgage of around £120k and similar houses are on market for (and not selling ) around £125/30. Clearly we would not have enough for a deposit on another house if we were able to sell so we are stuck.

So, we have decided that it would be wise to stay put and extend - this leads me to my question - as we are effectively in negative equity will the bank lend us money for an extension? Will they assume that following the extension we will have a LTV of 85-90% and lend us the money or would we need 85% loan to value prior to the work?

thanks

kingstreet

You would not be able to extend your mortgage at this time. You could consider a loan for the development, then look to extend the mortgage to pay off the loan after the work is done, but there are no guarantees and this is a risky option.

Have other properties nearby been extended? Can you accurately gauge the likely value after extending?