Remortgage queries

p_camp1

Hi - Looking some advice on this situation we have:

With Barclays we currently have a mortgage of £60,000 with an additional mortgage of £13,000. this was due to us remortgaging a few years ago and for whatever reason they couldn't add it onto the original mortgage so they set it up as an additional one - both are on the same rate though. so in total its £73,000.

We are looking to do renovations and extensions to the house and estimate about £40K is required to complete it. We are looking to remortgage but the problem is our house is valued at £120K.

I'm guessing here that its not going to be possible for us to get a remortgage to £113K on a house valued at £120K?
does anyone know if we could remortgage just the £60K one to say £100K and leave the £13K one as is - is that possible?

engineer_amy

No matter what way you look at those 'options', the end result is that you will have £113k of debt secured against an asset worth £120k, regardless of which loan you increase/extend. that works out at 94.17% LTV, it may be possible, as some lenders will consider 95% LTV, but not likely to be at great rates.

p_camp1

Thanks for the reply on that. Yeah, getting a loan amount so close to the value of the house isn't ideal.

I'll look at the 95% ones now and see what rates they are. Hopefully if we fix for a few years, the house price may have gone up and we could switch to a 90% or 85% mortgage for a better rate later on.

Carrera74

Just to add that some lenders may offer remortgages up to a higher amount but if remortgaging to borrow more money then they reduce the percentage they'll lend. Our bank offers up to 85% LTV for remortgages but only up to 80% LTV for extra lending.

Just something to look out for

swindiff

Surely if you are adding extension and renovating at a cost of £40k then your house will increase considerably in value. Therefore the LTV wont be 95% when the work is complete.

p_camp1

Swindiff - Yes the value of the house should go up but I thought the remortgage would be based on the value of the house now, not the value it will be when the renovation is completed?

kingstreet

When you go back to your existing lender for for a new product, that's a customer retention product, not a remortgage.

When you go back to your existing lender for more money, that's a further advance or additional borrowing, not a remortgage.

You still have only one mortgage on your property as this is the deed which ties the security property to the loan.

You may have separate loans represented by sub-account numbers.

A remortgage is going to a new lender and borrowing enough to repay the existing mortgage and to cover anything else you might need to do. A new mortgage deed is required to tie the new loan to the security property.

Typically, you'll be able to remortgage to upto 90% of the current value and lenders won;t lend based on a potential future value you say to your home will be worth IF you actually do the things you say which will make it worth more.

You may need to take unsecured borrowing to complete any improvements, then remortgage to a new lender to take advantage of the improved value and lower LTV.

dimbo61

What are you planning on doing ?
Have you drawn up plans? and applied for planning permission if Needed?
Now if you have a 3 bed property with 1 bathroom and plan on extending on the side ( if you have the room?) and add a two storey extension with extra rooms downstairs and say a downstairs bathroom plus extra bedroom and en-suite upstairs then you may add value.
Changing the kitchen and bathroom may not add one penny onto the value!
Why do you need £40,000

Thrugelmir

If you can afford a larger mortgage. Then there's no reason not to start overpaying now. This will help build equity for the future.