Loan and then remortgaging at higher ltv?

Kayleighb1

Hi, can anyone tell me if this is a bad idea financially?

We want to do an extension and loft conversion on our home.

Costing around £50k
Should increase our house value by around £80k

Would it be daft to fund the works with a loan, and pay back the loan in full by remortgaging and taking out some of the equity in our home?

We currently own 25% equity.

Contemptuous

Why bother with the loan? Why not just release some equity to fund the work?

Kayleighb1

Because 25% equity would not be enough, and we couldn't afford the increased mortgage payments with a smaller ltv.

Ideally we would use a bridging loan but don't think they are given much any more

Kayleighb1

Maybe a few 0% credit cards.

Either way, is it mad to go into debt, relying on a remortgage to pay it back?

Red-Squirrel_2

There was a poster on one of these boards not so long ago who had put about 50K on credit cards for home improvements with the same plan in mind, but then found that they were rejected for remortgages due to their high level of debt!

Only do it if you can afford the loan payments if you get refused a remortgage, don't count on it being accepted.

Kayleighb1

Thank you, that is a useful and sobering story.
Maybe a loan from the bank of mum and dad!