Mortgage to fund extension

mysk_girl

Does anyone know how Nationwide will view a request to borrow money to build an extension?

We need to borrow about £50k (getting quotes at the moment). Outstanding mortgage is currently £196k on house worth £300k. Probable value after extension should be around £400k. We earn £86k between us and have no other debts.

How do they calculate LTV? On the 'before' value or the 'after' value? We have £15k in savings that we could use to get the works started if they want to see work bring done before releasing any money... Do they even offer this kind of mortgage?

We have planning permission and full building regs approval already, and a builder lined up to start in march next year - just need the finances now!

opinions4u

http://www.nationwide.co.uk/mortgages/existingcustomers/topupmortgage.htm

BristolBob

A 50K extension will add a third to the value of your property?

mysk_girl

Based on what estate agents have said, these are the values we were given... I think they are either possibly being conservative with the current value or optimistic with the future value and until we pay for a RICS valuation, we won't know which!

We paid £250k 3 years ago, was unliveable (but had kitchen and bathroom which allowed us to get a mortgage) We've spent £50k of our own money since then to renovate and go from 3 to 5 bedrooms. The only thing we haven't done is th kitchen, it's tiny and this would be a large aingle storey extension (2/3 again on GF footprint) to create a new kitchen/utility/toilet/family room.

I took the PP plans to an EA and those were the figure I was quoted...

Thanks for the link, I found that one on my first trawl of their website, but wondered about the LTV bit as we'd get a better rate if they took the extension into account. I fear this is optimistic though, as obviously it won't exist as the point we get the money!

Jimbo1976

You are right to be wary of estate agents figures as they to be optimistic most of the time.

NW is unlikely to give you the money based on the future LTV as in the past naughty people have borrowed the money and spent the money on other things rather than the extension. However they may agree to stage payments when some of the work is done, so you would use your savings to do some work, an a surveyor confirms its done then another chunk of money is released. Thats how it works with self build.

I think its best to give the NW a call and ask them about it.

mrchiggles

We were in a very similar position when we were with HSBC - they simply wouldn't lend us the extra money to do the work on the basis of an increase in value, we could only draw down on existing equity.

In the end we had to be creative and fund it via a £50k personal loan, got the whole thing revalued once the work was complete and then remortgaged with Barclays which of course covered the HSBC existing mortgage and paid off the loan.

Bit of a risky strategy but did the job!