2nd mortgage for extension

Paul_T_Newby

Hi All



We have applied for a second mortgage of £25 for an extension to our house which the bank Nationwide have approved. The only problem is they will not release the funds until the extension is built! Which means expecting the builder to do the work before payment.
I was wondering if this is normal practice as it does not make sense to me, offering the loan after the work is done.
I have spoken to the builder and this is the first time he has came across this


thanks in advance

somethingcorporate

Weird! I have never heard about anything like that before. I am not sure you'll be able to find a builder to work on those terms either.

How much is your home worth and what is your current mortgage value? do you have enough equity to draw against the house value excluding the extension?

Paul_T_Newby

Hi Thanks for the quick reply,

The house is currently valued at £95k which is about £10k less than we thought. So after the build we are hoping it will be worth around £125k.

It would have made more sense to be of the bank just refused the loan, rather than offering the amount after the build??

Thrugelmir

When does the builder expect to be paid. Before its built?

_Andy_

Paul_T_Newby wrote: »

We have applied for a second mortgage of £25 for an extension

Sounds like a bargain!

Trig1903

Are you borrowing against current house value or agsinst the potential post extension value ? When we extended the funds were released up front but we were borrowing against equity we already had in the property. Builder was paid in stage payments.