Home Extension Options???

Moneynovice

I'm hoping for some good money advice - my head hurts from googling every evening!
I've been offered an advance on my mortgage - 25k at 2.69% fixed for two years and to lump it in with my outstanding loan - 89k - I was previously on 6.49%, so affordability should not be an issue.

I'd love to extend our home with this money but getting quotes from builders, it is going to cost aprx 40k. Can I take the 25k now and put it in a high interest savings account? Do I have to pay tax on it? Then reapply in 6 months for the rest of the money? Lloyd s said I can re-apply in 6 months.
I could take the 25k now and try and get a personal loan for the 15k? 3.6%??

A valuer visited the house and gave a valuation of 135k - however my little house comes with a very large garden and he suggested I could easily split the garden and get planning permission for a property development. He thinks the land could then be worth £70-80k. Would my lender then include this in the total valuation? The valuer on the day said without planning permission he could only value the property as having a big garden...

I'm tempted to shelve the idea and re-try again in 6 months but then i might not get offered the 2.69% fixed for two years...

Ideally I don't want to sell half my garden but would be happy to pay the £180 for planning permission if it means Lloyd s would then give me the full 40k..

Any help/advice appreciated? I know I should save the 40k but my kids will have left home by then...:eek:

[Deleted User]

personally i would get planning permission (takes forever i know)then have the land re-valued with PP you maybe surprised at how much it might worth,possible enough to tempt you to sell it?

Moneynovice

Thanks for replying. Do you think the mortgage advance offer will be increased with the new land valuation? Also, am I silly to let this 2.69% mortgage offer go? everyone is talking about interest rates going up..They've put me on 3.9% (house rate) until I decide on the new mortgage deal...I massively love my garden but you're right, money talks, my architect thinks it is very sell-able (sp!) due to the pretty views over open fields, he has even said he would be interested in buying it.. ..which could make me mortgage free but would rather keep it as a pension pot for when I'm too old to do the weeding!

WellKnownSid

The mortgage company will not upscale the valuation because you've got PP which requires dividing up their assets. Effectively you may have reduced the value of the house/garden.

Selling off to pay off the mortgage might be a plan.

Moneynovice

That's really interesting, thanks for replying. The surveyor sent from Lloyds said the opposite to this, he said he could put forward a much higher value if the land had planning permission on it. I'm all up for this but it takes 8 weeks and then i'd be worried about not being offered the low mortgage rate, I;ve been offered. Now I'm even more worried..

The last resort is to sell the land as I love the privacy and the kids would miss it.

Feels like this is all a big game and i'm seriously unfit and don't know all the rules...

WellKnownSid

Ask on the mortgages forum for the best answer. In my experience splitting land off from a mortgaged property is not straightforward, and PP may increase value but only for the five years it's valid for. Not for the remainder of the mortgage.

The guys on the mortgage forum will know how to do it.

Moneynovice

Thanks, now posted in mortgages!