finance for extension

kentucky_kid

Hi looking to finance an extension and I need advice. Ideally would like to raise the money through remortgage next year but unlikely to have enough equity to get the money we need. Are there any companies that will lend based on house plans or planning approval being in place against expected new value? I believe this used to be the case.
If the answer to the above is no I assume a secured loan is the only option for loans of greater than 25k?
My idea is to get a loan with minimal early repayment charge and then repay when we remortgage in the future with the new house value which should be a good bit above extension cost, going by current values in the area.

Any advice on finance greatly appreciated.

amnblog

This question comes up regularly.

The lending is secured against the property and therefore can only be secured on the value of the property as is. The extended property 'does not exist' so cannot be used as security.

kentucky_kid

Thanks , can you give your opinion on other funding for extensions, are secured loans the common solution?

ExpertAdvice

Hi,

Even with the secured loans, there is a restriction on the LTV. The company offering secured loans put a second charge on the property.

So if there is not enough equity in the property to get a remortgage it won't be enough to get a secured loan either.

Also as mentioned above, the lenders are not interested in knowing what the future value of the property would be after extension/repairs. They can only survey the property based on the present condition.

How much is the property price and the outstanding mortgage?

kentucky_kid

Hi , thanks didn't expect that secured loans companies would take cognisance of the plans, but had heard that in the good days mortgage companies would lend in this type of situation, sadly no longer the case.secured loans will lend on a higher ltv but after doing some research I noticed that there are some remortgage deals at 95 to 120 ltv which I hadn't expected.the 95 one should be enough I think.