House Extension Finance

Quinntastic

Firstly, i hope this threads in the right part of the forum..if not please move.

We will be extending our home over the Summer to provide additional family living space. Planning permission granted and we're at the ready to build phase. Its quite a big job at around 50k.

We have 35k cash to put straight into the project, my question is how best to raise the remaining 15k? The build is not for profit, however a couple of post project valuations have said that we would add around the same kind of money onto the value of the house.
The end game is to re-mortgage at the end of the project, what i'm trying to avoid short term is multiple credit searches as we investigate the best way to finance the remaining 15k.

We think our current lender may want to tie us in whereas i'd rather wait giving us a better LTV rate at the end.

Thanks

Clive_Woody

Depending on your salary and current debts you may be able to borrow the £15k as an unsecured loan. Normally people suggest a maximum of 50% debt to salary so you would need to be earning INXS of £30k and have a good credit history.

Sites like Nationwide offer a soft search facility that allow you to get an idea whether you would be approved and at what rate.

Quinntastic

Clive_Woody wrote: »

Depending on your salary and current debts you may be able to borrow the £15k as an unsecured loan. Normally people suggest a maximum of 50% debt to salary so you would need to be earning INXS of £30k and have a good credit history.

Sites like Nationwide offer a soft search facility that allow you to get an idea whether you would be approved and at what rate.

A personal loan either secured/unsecured would tie us in over a longer period?

What about a bridging loan over 6 months? Another possibility is each getting a short term 0% credit card and paying both off at the re-mortgage stage at the end of the project?
with the 15k added we are looking at a 85k mortgage on a 160k property.

somethingcorporate

Bridging loans will be very expensive.

Unless you have an amazing credit history the chance of you being offered a £15k balance on a 0% credit card is very low, even so, it won't allow you to draw cash at 0%, you'll need a super balance transfer card (have a look at the CC tab above) so I think your chances here are slim as even those carry quite a fee (usually 4% upfront).

Cheapest way is likely to be a loan, you can pay it back early, there may be a slight penalty for doing so (usually it's a couple of months interest).

Quinntastic

somethingcorporate wrote: »

Bridging loans will be very expensive.

Unless you have an amazing credit history the chance of you being offered a £15k balance on a 0% credit card is very low, even so, it won't allow you to draw cash at 0%, you'll need a super balance transfer card (have a look at the CC tab above) so I think your chances here are slim as even those carry quite a fee (usually 4% upfront).

Cheapest way is likely to be a loan, you can pay it back early, there may be a slight penalty for doing so (usually it's a couple of months interest).

Doh!! A lightbulb moment on my part, i guess its just a matter for checking out what the early repayment fees would be.

StuC75

What is the current mortgage deal you have and the LTV%. What is the interest rate that your mortgage has?

How would the scenario be revised adding the 15k to the mortgage - although may not be impacted too much if adding £50k to value then.

Then compare what the difference in interest rates are of taking the 15k on mortgage rate or personal lending rates?

Do consider how the affordability of the personal loan 'could' impact on if you were to remortgage down the line? without knowing too much about your earnings and family situation this may or may not matter..

Have you spoken to the mortgage company of how they could arrange this advance? e.g. Apply to have it 'sat waiting' to draw when the 35k as been spent and they re-value \confirm that the work in progress has increased the valuation enough for the final push that the 15k is needed for...

Clive_Woody

Quinntastic wrote: »

A personal loan either secured/unsecured would tie us in over a longer period?

What about a bridging loan over 6 months? Another possibility is each getting a short term 0% credit card and paying both off at the re-mortgage stage at the end of the project?
with the 15k added we are looking at a 85k mortgage on a 160k property.

I am far from an expert but I am not sure how much better mortgage deals get once you go below 75% LTV, so remortgaging now to raise the additional funds may not really have much impact, other than make the new lending secured but potentially get a lower APR.