Remortage for Extension - Novice

marc81

Hi,

We are currently a year in to a 2 year fixed deal and would like to remortgage for an extension when it is up for renewal next year. We've had the house for just over 5 years (2 bed semi in the North West) and when we bought the house we had the large garage converted into a lounge (5mx5m). Now that we have a child and with thoughts about having another in the not too distant future we are considering building above the converted garage to accommodate a 3rd bedroom and possibly making the current bathroom bigger (when the garage was built it was footed well and built double skin with the potential of building above). We have around £100k outstanding on the mortgage with the last valuation being £125k. From a few rough online estimates from builders the cost of the extension would be £15-20k. I'm pretty sure that looking at other houses in the area once the 3rd bedroom is added the house would be worth around £150-155k. Now when it comes to mortgages and extensions I haven't really got a clue on the process so have a few questions;

* What comes first; estimates, plans, building consent, the remortgaging?? I honestly don't know what order it's all done in.

* When remortgaging do they work out the LTV off what the house is likely to be worth once building is complete, is this done by estimate from looking at the plans? (This ties in with my first question).

* This one isn't really mortgage based but do most builders draw up the plans or does an architect also need to be considered?

Sorry if this is all basic stuff but any help is much appreciated.

Thanks,

Marc

Thrugelmir

Lenders will base any decision to advance funds on the current value of the property. Not when the work is done. You need to build up some more equity. Overpaying your existing mortgage will speed up this process.

amnblog

Start with consent, a architect or project manager is useful if you do not want to deal direct with the builder.


The mortgage cannot be based on the house with the extra bedroom as it does not exist yet. It will be based on the value as is.

Foxy-Stoat_3

Your currently at 80% LTV so the chances of borrowing more are slim to none with your current lender.

Maybe try and get an unsecured loan and remortgage once the extension has been completed and property re-valued.

You need to engage an architect for drawings/plans, hand them to a builder for them to provide you with a firm quotation and go from there.

If you don't need planning permission, you will need to involve your local Building Control Officer before you start.

Good luck !!

marc81

Thanks for the advice.

I didn't realise the valuation would be off the current status, I thought that they may estimate the value.... this scuppers things completely really. Looks like I'll have to find someone nice to lend me £20k for a few months ha.

In reality, I got a loan in the short term and then remortgaged once the build was complete, does this loan count against me credit wise when remortgaging or do they take this in to consideration knowing that it will be paid off with the extra I would want to borrow?

Thanks

Foxy-Stoat_3

marc81 wrote: »

In reality, I got a loan in the short term and then remortgaged once the build was complete, does this loan count against me credit wise when remortgaging or do they take this in to consideration knowing that it will be paid off with the extra I would want to borrow?

It would be included in the calculations and affordability checks, but if you are drawing the equity out to pay the loan that was soley used to fund the extension then it may not effect you that much.

You would of course be paying the loan back until you remortgage, but it may be better and cheaper for you to just switch deals as the LTV would of gone down and keep paying the loan rather than pulling equity from your home to clear the debt. You would almost certainly pay more in interest if you add the £20,000 debt onto your mortgage, so that needs to be factored into your numbers.