Funding an extension?

wolfwiser

My partner and I want to add a ~£50k extension to 'my' house, she has 'her' house on a 12 month permission to rent from her bank and this house has tennants and is financially self sufficient at the moment. Releasing equity from 'her' property is simply not cost effective, and selling would this take too long.

I have approx £155k outstanding on a £220k valued house, (the house would post extension be worth upwards of £290k) and we have combined incomes of ~£100k. What is the best way to finance this extension?

- release equity up to a 'decent' Loan to Value amount (say 80%), and then make up the shortfall in unsecured loans

- release equity up to high loan to value (say 90%) and remortgage when the extension is complete (with probable large fees)

- My (retired, mortgage free) parents have offered to help and could transfer equity of their house, or remortgage this? What are the option here?


We are expecting a baby early next year and going to proceed with planning permission anyway, as this will take time, but we do need to get the ball rolling with finance soon!

Any input welcome, cheers guys!

DannyboyMidlands

Why not just finance it with cash from the £100k salary?

sinbad182

DannyboyMidlands wrote: »

Why not just finance it with cash from the £100k salary?

I dont think they get paid 50k each in one lump sum hot shot, so unless they want to build it over a period of years thats not a great suggestion is it?

Mallotum_X

Have you spoken to your lender about the options they may have with regard to lending on the current property for this?

DannyboyMidlands

sinbad182 wrote: »

I dont think they get paid 50k each in one lump sum hot shot, so unless they want to build it over a period of years thats not a great suggestion is it?

Well it's better than your suggestion and certainly better than sponging off the retired parents.

sinbad182

DannyboyMidlands wrote: »

Well it's better than your suggestion and certainly better than sponging off the retired parents.

It wasn't even a suggestion though was it mate? Just a half baked attempt at being a wise arse.

DannyboyMidlands

Who rattled your cage? It's a perfectly sensible suggestion. Save the money and pay cash.

sinbad182

DannyboyMidlands wrote: »

Who rattled your cage? It's a perfectly sensible suggestion. Save the money and pay cash.

They want the extension because a baby is on the way - you'd be doing pretty well to save 50k in 9 months don't you think?

Thrugelmir

Sell your partners property.

Don't assume that an extension will add value. £10k of that building work spend will be in the form VAT so no value.

DannyboyMidlands

sinbad182 wrote: »

They want the extension because a baby is on the way - you'd be doing pretty well to save 50k in 9 months don't you think?

Jeez, let it go. It's what I would do and a suggestion for the OP. Take your nitpicking elsewhere son.

Any input welcome, bouncing ideas around, no wrong answers, don't shoot the ideas man etc. etc.

Personally I'd expect there to some savings knocking around and I would question the need to have the whole thing done and dusted by the time the baby arrives.

wolfwiser

Thanks for all the suggestions thus far.

We were hoping to sort this out before the baby, and have met a builder whom gave us a rough price, the £50k I suggested includes VAT, and fittings etc. This would add (albeit) slightly more value than the cost, however this would only be relevant for future remortgages in terms of valuations. Similar properties are for sale (on under offer for that matter) for the estimated future value of £290k.

I was looking for options and potential novel ways to fund this, as to all intents and purposes we need a lot of money (£50k) for a short period of time (extension build plus remortgage).

The houses in the area where my partners is situated don't seem to sell too readily, however there is a high demand for rentals. This information has little effect upon the overall question, but thought it could be used (spread equity over two houses or something).

My parents have offered to involve their house, as my brother and I shall eventually inherit anyway, and they want to help. This is not a case of sponging.

Ideally saving would be a good option, however the time aspect to the question doesn't help. I appreciate the conclusion to this could be save up and wait, any savings have been involved in the calulation leaving a £50k shortfall on the potential build.

Seriously though, thanks for all thoughts and input, I appreciate your time and opinions.