Drawdown mortgage for house extension

Bewildered_Bunny

Hi there,
My first post so please excuse any mistakes or lack of protocol......

My partner and I have arranged a drawdown mortgage (moving from Abbey to A&L) to build an extension to our existing house - we have 4 kids but only 3 beds and worst of all, 1 toilet at the moment :eek: We should clear 76k difference when it completes next week, but the building work won't start for a few months and may go on for a few more. The spare cash will be burning a hole in a current account until it's finished.

Our quandary is this: what to do with the extra money in the interim? Do we give it all back to A&L and presumably pay less on our mortgage, drawing funds as we need them? Or should we put it in savings account(s) if the interest is better? We're both taxpayers so presumably we'd have a tax bill on the interest.

For info, the mortage rate is 0.28% below Base Rate (currently 4.97%) fixed for 2 yrs, with full flexibility to overpay. Does anyone know what kind of interest we'd have to get on the money to make it worthwhile shuffling it about, or should we just keep it simple and hand it back to A&L for now?

Does anyone know how long it takes to get the money drawn down once it's overpaid and is it easy to do?

BTW, we'll be asking Abbey for the difference between the 85 quid fee they stated when we took the mortgage out 5 yrs ago and the 225 pound MEAF they're charging us now but have decided to wait on that as it's too complicated to get it sorted before we complete.

Any advice gratefully received........

Bewildered_Bunny

Sorry if I made a mistake in asking several questions at once, but does anyone have any advice on what's best to do with the dosh before we get our building work started?

In hope.......
BB :huh:

mrs_deadline

Yes, you will be taxed on any interest you earn so it's probably not worth the hassle of drawing it down before you need it. I'd suggest calling A&L again, just to be clear what their procedures are for claiming the extra when your building work starts.

We're doing something similar this summer, got the additional borrowing agreed last year but it's taken a while to line up builders etc. Our lender (Nationwide) will require a letter signed by both of us and something like a week's notice (roughly - not quite sure of this yet) to release each chunk of additional loan.