Remortgage for extension

cmonwigan

Good morning all. Apologies in advance for the length of this post.

We are planning an extension in just over a year's time - Spring 2016. Our house is valued at £260k, and we have £130k outstanding on the mortgage. We believe the extension will cost £100k. We will have £40k saved toward this by 2016.

We are currently on a 10 year fixed rate (5%) and we will have a 4% redemption penalty around £5k.

There are a couple of options we are looking at through Nationwide. A 60% LTV 10 year mortgage at 2.94%, which is of interest as we would like to pay the mortgage in 13 years (the remaining term of our current mortgage).

In order to raise the other £60k, we would apply for a further advance next year.

With uncertainty about rates, we are looking at taking a remortgage of £190k now, so we have the money in advance of the building work. This however would take us to a loan of 75% LTV and we could no longer get the 2.94% 10 year rate. We can however get a 4 year 2.84% fixed deal, as we are Nationwide account holders.

Should we get one mortgage now at 2.94%, and a further advance next year for the additional £60k, or alternatively get the £60K now and have one big mortgage of £190k at 2.84% for 4 years.

Is there a better way of going about this?

Many thanks

cmonwigan

bump bump bump:j

kingstreet

Borrow it all using an offset product, then place the surplus funds in the savings account so you don't pay interest on that portion until you use it?

cmonwigan

Many thanks that sounds like a good idea, any provider you could recommend?

kingstreet

Knowing absolutely nothing about your circumstances, no.

You need to research appropriate products for yourself, or appoint an independent broker to do it for you.