Mortgage for house extension

muddymum

Hi
We are currently mortgage free which is awesome but with a growing (in age/size rather than in number!) family we have been thinking about moving or extending. As we love where we live and there is scope to extend and it is a much more cost effective way of achieving our aim than moving, we have decided to take the plunge and take out a small mortgage to extend the house. As we would only need to borrow roughly 20% of the value of the house, what sort of mortgage should we go for? Due to the way in which we get paid etc, we would ideally like to have the flexibility to pay off chunks from time to time. Is it possible to have an interest only mortgage and pay off capital from time to time? It is quite a long time since we last took out a mortgage and things have changed a lot!! The amount that we want to borrow is well within the scope of our combined income, we have permanent (or should that be non-temporary!) employment, are in our early 40s and are married without any previous relationships so no CSA payments etc. We have no ongoing debt but not much in the way of savings (enough for a rainy day but not much more). Anyway I hope I have given enough information for someone to help us!

MallyGirl

I have an IO offset mortgage as that effectively allows me to 'overpay' whatever I want. The flexibility is great but it does mean that you wouldn't get the best rates going - I pay 3.9% with approx. 30% LTV

dimbo61

You can also look at YBS offset mortgages ( repayment) and keep money in the offset account until you need to pay for the work.
If you get any Lump sums you can simply pay that into the offset account and make your normal mortgage payment every month.
First Direct do IO offset mortgages

muddymum

Thanks for the replies, I had no internet yesterday because of the storms otherwise I would have thanked you earlier. Sadly we would not be able to get a mortgage from First Direct as we do not have enough income... they demand a minimum of £50K single salary and minimum £75K combined! And that is their standard declaration before you have even filled in a calculator form! Hopefully we can find a lender who is willing to consider us. (I think we are pretty low risk with no other debt and owning our house outright at the mo but evidently not!).

dimbo61

Another vote for YBS then I have had an offset mortgage with them for the last 9/10 years.
They have some of the best deals on the market