Remortgage options to fund extension

surfslammer

Hi

We have just had planning permission accepted for a double storey extension to the side of the house and a single storey to the rear. It is currently a 3 bed detached soon to become 4 bed. Much of the work will be done ourselves or at quite a discounted rate so there should be some investment value in it.

We have around £20k savings but will need to fund the rest with the prime option being through a remortgage(?). We are currently at around 65% to 70% LTV with around 16 years on the mortgage (One Account at 3.85%).

My main query is around getting funds to pay for the build up front and getting the best mortgage at the LTV when the extensions are complete. Are there options like on new-build mortgages without paying a premium? What are the options on achieving funding through a mortgage? I may be able to borrow some funds from a relative on a shirt term basis to help complete the work if I can't secure the right deal and then pay them back following a remortgage after the build but I'd rather not go to them. I appreciate irrespective of the build we need to look at getting a better deal.

Any advice or considerations will be much appreciated. Thanks

amnblog

Not sure what you are asking here SS.

Are they lending options? - yes
Will you paying a premium? - depends what you consider a premium

It sounds to me like you could re-mortgage the lot, raise your extension funds, and still be paying less per month.

surfslammer

Thanks for your quick reply.

Sorry, I was wanting to know if we could remortgage now to cover the build costs but do it with the new mortgage taking into account the completed project value, so a better LTV and therefore better mortgage rate.

So, to do that rather than to raise funds to cover the expense in the short term, and then remortgage after the build is complete

I appreciate I can remortgage now to raise some funds which may well cover build costs but that will increase the LTV and limit the deals.

I was just looking for the options of what was possible, but mainly can you remortgage now on the future value once the extensions are complete?

If not then it may be I think I'm looking at remortgaging now to raise funds and then remortgaging again after the build to get the best deal on the final value whilst minimising remortgage charges along the way.

Any pointers on what to consider etc. will help fine tune my options so I can investigate in more detail.

amnblog

The 'improved property' does not exist so you cannot borrow against it SS.

Your LTV seems strong enough to obtain some good deals in any case.

surfslammer

Thanks for clarifying that option isn't an option. I just wondered if like a new build house there was a mortgage to suit but at least I can ignore that now.

I'll look at deals now based on my current LTV and whether a remortgage after the build will be viable/desirable taking into account charges.

amnblog

Get a broker on the case for best result SS.

Calum_Young

or take out a temporary personal loan, then re-mortgage after your extension is complete.


make sure that the loan dose not affect how much you can borrow?


just a thought- maybe a silly one!?

surfslammer

Thanks for the suggestions. It would be good if there was a cost efficient way to be able to remortgage after. I'll take advice and also keep an eye open for more suggestions.

foxy-stoat

Will £20K get you the foundations to the roof?

You could spend what you have to get you the externals finished and remortgage following a revised valuation based on the increased bedroom and floor area.

Or take out a remortgage, fix it for the minimum time and remortgage again when the fixed rate is up.

surfslammer

Hi Foxy

Thanks for your reply. I'm starting to price materials and labour to see where it will come in. I think getting the externals up and then remortgaging will be the best/most realistic option if I can stretch to that.

The short fix remortgage is a fallback but I wonder if getting a 'final' remortgage sooner rather than later will be beneficial with the prospect of rate rises. If needs be it will have to be done.

Thanks again. It helps for someone to flag up these considerations for me.

amnblog

If you are securing funding on the property do so before any work in carried out - otherwise the valuer may not be happy with the property as security on application.

Certainly, do not go to the lengths of one of our clients who gutted the kitchen and then was then confused when the valuer engaged for the re-mortgage application was not keen.