Confused!! Building a house in garden to pay off existing mortgage

michmush77

Hi,
Myself and husband have a few ideas to get our current mortgage down.
We have some land on the bottom of our garden where we can build a 2 bedroom bungalow.
The question is how to go about it....
My mother in law is willing to lend us the money to build the house which we have to pay back on completion. Say £70,000

My question is.....when the house is built, can I then Get a mortgage to release equity to pay my mother in law back and pay a whack off on my mortgage.... Say pay mother back £70,000 and pay £50,000 off on my current mortgage...then I will rent out 2nd property for £650 a month which will pay for mortgage payments (£120,000), this house will be our pension fund in 20 years time.

Our immediate plan I to get our current mortgage as low as possible.

So in a nutshell, could I get a mortgage for £120,000 after the house is built.

Or would it be better to get a self build mortgage and not bother borrowing money of mother?

I'm baffled!!

Funny_old_game

You have to get permission from your lender first. Planning permission, plans, the works.

You need to overcome that hurdle first before thinking of money making schemes.

Also the fact she will live on their land will cause repo problems for them.

Possible but months and months off yet, if not years.

ethank

How much will your current property be worth now, and after you build. If there is any loss of security to the current lender, they will not approve this.

Thrugelmir

You maybe better off selling the garden to a developer and reducing your mortgage balance.