Been advised to Post in here rather than Loans, anyone got any ideas please?

JimmyTheWig

Moneynovice wrote: »

maybe I need to wait a couple of years and my house might be worth the magic 153k and then the mortgage rates might be sky high though, I need a crystal ball!

If you get a two year fixed rate now and mortgage rates are sky high in a couple of years then your repayments are going to go sky high.

tlc678910

If you can get planning permission and negotiate with your lender then selling the piece of garden sounds a good option.

Your lender is concerned about the falling value of your mortgaged house if you sold the land because this is the security for their money i.e. You want to sell part of their asset but instead of repaying them you want to keep the money. I appreciate you intend to build an extension and increase your home's value but the bank has no guarantee that this will actually happen.

Can anyone with experience advise how banks handle this? I'm guessing you would need to work with your bank if you wish to sell any part of your estate and pay valuation fees for your "new" property and land (existing one less some garden) (possible new affordability checks?) you might be asked to repay some of the lost value off the mortgage or to remortgage?

Despite the complications I think this is the better option becauseif you can do it you should be left with plenty of money should your build go over budget and you should have sustainable repayment levels. If you top up your borrowing with 15K of personal loans and then problems arise and you need more you will be left seeking further loans/using credit cards which may end up with hefty interest and minimum payments. You can usually overpay your mortgage to 10% a year if you can afford to pay more.

Because you have been offered 25K at a good rate I thought could you save the rest but..you will be paying the interest on this 25K while you save (although low rate) and if it takes you two years to save the low interest fix will have ran out. So another option is save 15K over the next couple of years and then look to borrow what you are short. Yes it might be a little more expensive but it might not. You might be able to borrow a little bit more by then for contingency and you will have put off paying any more interest for a couple of years.

Good luck Tlc

Angie_B

Moneynovice wrote: »

Yes looks like a personal loan is the immediate option, or sell the bottom third of my garden and fund the extension that way. Still find it strange that the land has been valued at 80k but the bank wont include it in their calculation and they see it as de-valuing my house price...ah well maybe I need to wait a couple of years and my house might be worth the magic 153k and then the mortgage rates might be sky high though, I need a crystal ball! Thanks for pointers

Do you really find it strange? Think about it - is a house with a small garden that is overlooked by a new build worth more than a house with a big garden that is not overlooked? No, of course it isn't. The land is only worth £80k with a development on it - and in order to realise said development you no longer own said land. You may have the money from the sale but you have, by selling off that portion of your land, de-valued your own plot (which is the only thing the bank is interested in as that is their security).

Moneynovice

Thanks for replies, I now understand why, I hadn't looked at it like that.. My current bank is offering an advance based on 85% LTV I wonder if I re-mortgage with someone else I could get 90%? Just looking at the personal loan repayments plus the mortgage payments means quite a hefty commitment and worried where i would be once the fixed term ends..

Yes saving for two years is the other option, selling the land is a last resort..

dimbo61

You need to take a long term view on this.
You owe £89,000 now and when is your current deal finished, What rate are you paying ?
After the double extension is built will your home be the most expensive on the street ?
What is the size of the plot at the side of the property ! Can you build a Bigger extension ! Extra larger bedroom with en-suite and downstairs extra room/s with downstairs bathroom. It may cost £40,000 for the double extension but only £45,000 to add the extra space.
Could you look at buildstore who do self build mortgages and others who would revalue the property once the shell of the extension is built !
They would then lend more to finish the inside on the new higher valuation.
You might well get into money troubles if you have a mortgage, extra secured loan and credit card debts all at high rates to finish off the protect if you are not careful.

Moneynovice

Thanks for replying, yes getting saddled with a load of debt is not a good plan. I've just looked at that buidsure website and will talk to them, this might be my best route! Just need to work out what payments will be on 5.9% all the paperwork I have is based on 2.89% yikes!

tlc678910

I just had a look at the website and I'm not clear if you can borrow just for the extension or do you have to remortgage your whole house? I only wonder because their security on lending (your house/plot) is already owned largely by your current lender so I can't see how you could secure a loan against it. I can see how this would work if it was owned outright by you.

If you have to refinance your entire house at such a high rate it will cost you a significant amount more every month even before any additional borrowing takes place (depending on your current rate of course). If this is the case make sure you take your time to make the decision and crunch the numbers very carefully.

Tlc

Moneynovice

Thanks for your reply. I spoke to them today and they think I should avoid the self build mortgage option and I should try and maximise the cash through a normal - no switch penalty mortgage and then top up with a personal loan until the build is done and then re-mortgage again with the property being worth significantly more..

They have offered me a tracker at 2.5% above bank rate through nationwide.and making an application tomorrow, pushing/hoping for them to value at the highest price possible - my magic number is 153k - significantly more than recent valuation.

So I'm in the hands of the valuer...LLoyds valuer said 135k and I just have to hope that Nationwide use a different panel.

Exhausting looking at all the options...personal loan scares me but he suggested ZOPLA? as he said they are super flexible..

Hopefully it will not come to this..thanks again for your comments