Moving mortgage advice

g424ahe

Hi,

We've found a house we want to buy but it has planning for a single storey kitchen extension that we feel really needs to be done. However it would mean borrowing 20k more and therefore the LTV going over 75% (but under 85%) and hence big hike in APR%. But once the work is done the house will be worth more so the LTV would drop well below 75% again.

Are there options re. mortgages, or is my best bet to borrow at the 85% LTV get the work done and re-value the house and re-mortgage after to get the reduced APR%?

Hope this makes sense?

kingstreet

Take out the mortgage you need to get the work done after completion, but choose something with an offset facility and which has no early repayment penalties.

The offset facility will give you a home for the money while the work is done and it will help to keep the interest payments lower.

Going for something with no ERPs means once the work is done, you can look to remortgage or go back to your lender for a new rate which reflects the improved value and lower loan to value.

g424ahe

Thanks for the advice... I have an offset with FD at the moment so like the idea of sticking with offset.

kingstreet

Just go back to your lender for your new mortgage then.

That was easy!

g424ahe

That will be my first port of call, but was just wondering if there are other options out there for this circumstance.

Thanks for your help.

kingstreet

Other lenders offering penalty-free offset facilities?

I would guess so. You need to research the products you feel would be most suitable for you...