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Buying, extending, and then re-mortgaging?
Baxter100
Posts: 192 Forumite
Hi All,
Me and my girlfriend have roughly £70,000 deposit to put down on a house. There is a particularly good mortgage deal we are looking at which requires a 20% deposit - this means that effectively we have been looking at houses costing £350,000 maximum.
We are looking at a house which is currently on at £350,000. Ideally we would like to extend the house shortly after moving in, at a cost of roughly £20,000. If we still wanted to use the 20% mortgage deal, then we would not be able to afford the money for the extension.
We were thinking of potentially going for a mortgage deal which requires a 15% deposit, which would leave us with £17,500 to get the work undertaken. Once having done the work, would we then be able to re-mortgage the house at it's new value? So say the new value of the house is £375,000, and the amount we borrowed is £297,500, would we then effectively have a £77,500 deposit to consider when re-mortgaging? This would be more than 20% in this little scenario, so the mortgage that we want would come back into consideration.
Can it practically work this way? What dangers, thoughts, considerations are we missing? What is the process for a mortgage company re-valuing a house?
Sorry so many questions!
Me and my girlfriend have roughly £70,000 deposit to put down on a house. There is a particularly good mortgage deal we are looking at which requires a 20% deposit - this means that effectively we have been looking at houses costing £350,000 maximum.
We are looking at a house which is currently on at £350,000. Ideally we would like to extend the house shortly after moving in, at a cost of roughly £20,000. If we still wanted to use the 20% mortgage deal, then we would not be able to afford the money for the extension.
We were thinking of potentially going for a mortgage deal which requires a 15% deposit, which would leave us with £17,500 to get the work undertaken. Once having done the work, would we then be able to re-mortgage the house at it's new value? So say the new value of the house is £375,000, and the amount we borrowed is £297,500, would we then effectively have a £77,500 deposit to consider when re-mortgaging? This would be more than 20% in this little scenario, so the mortgage that we want would come back into consideration.
Can it practically work this way? What dangers, thoughts, considerations are we missing? What is the process for a mortgage company re-valuing a house?
Sorry so many questions!
0
Comments
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Possibly, but will the lender's surveyor agree with your estimated value? An inspection (at your expense) is possible.Once having done the work, would we then be able to re-mortgage the house at it's new value?
Yes. Your equity based on that value would be 21%, so a remortgage product at upto 80% would be correct. If you think you can go back to your existing lender, that's not a remortgage, so you would probably have to keep your existing product and take a further advance at a different rate if you needed to borrow more. Remortgage products are for those moving their mortgage to the lender - ie new borrowers.So say the new value of the house is £375,000, and the amount we borrowed is £297,500, would we then effectively have a £77,500 deposit to consider when re-mortgaging? This would be more than 20% in this little scenario, so the mortgage that we want would come back into consideration.
Can it practically work this way? What dangers, thoughts, considerations are we missing? What is the process for a mortgage company re-valuing a house?
Remortgage and purchase products are often different, so make sure if you are looking at changing lenders, you look at the right product at the right time. You would have early repayment penalties to pay (if any) on the current product and if it applies it, your lender may not be willing to accept a remortgage until you have owned the property for six months or longer.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Great thanks for the clarification.0
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You must also consider the length of fix and exit fees or early repayment charges.0
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