Home Improvement Loan

marc81

We are currently in the process of trying to get our house extended as we require a 3rd bedroom, rough estimates of the extension are around £20-25k. Our first option will be to see if we can finance it on the mortgage, we are currently at 75% LTV (£100k/£135k), taking a further £20k will take us to around 90% on the current valuation, once the works are carried out I estimate the house value to be around £160k. I'm unsure if the bank will go with this as we have literally only just agreed our new mortgage deal. As a second option I've been looking at home improvement loans over 10 years but I have a few questions around these; can you make a joint application for these? Our joint salary is currently just over £31k. I already have a £7k loan, will this drastically affect our chances of acceptance? The payments are low on it, £130/month.. my wife has no debt and there is no other debt between us (cards, overdrafts etc.). The work needs to be done regardless really but I don't want to end up having to finance it on cards and stupid APR loans so I'm trying to find my best options.

Any advice much appreciated.

foxy-stoat

Think you will struggle to release anything over 80% LTV on your current mortgage, the lender will only use current property state to value, not possible future extension work.

You may also struggle to get £25K on joint salary of £31K, maybe £10K loan each over 5 years or try juggling with zero % balance transfer cards, but that could be a slippery slope.

Can you spend a year or 2 saving and financing the work over time?

marc81

foxy-stoat wrote: »

Think you will struggle to release anything over 80% LTV on your current mortgage, the lender will only use current property state to value, not possible future extension work.

You may also struggle to get £25K on joint salary of £31K, maybe £10K loan each over 5 years or try juggling with zero % balance transfer cards, but that could be a slippery slope.

Can you spend a year or 2 saving and financing the work over time?

Thanks for the reply. Due to a new baby, waiting a year or 2 will be difficult. The 2nd bedroom is too small to accommodate 2 children and there's only so long you want a baby in your own bedroom! We're currently with Natwest and they do say on their website that they may be able to loan you up to 90% of your property's value when borrowing more so it may still be worth a try I suppose.

[Deleted User]

andrewjack21 wrote: »

Maximum loan up to 90% (up to 80% for loans between Rs. 20-75 Lacs, & 75% for Loans above Rs. 75 Lacs) of the cost of improvement. This is however subject to valuation of the property as assessed by <spam bank>.Maximum term is 15 years subject to your retirement age and may vary as per your profile .Can be applied for either individually or jointly

Reported as spam.

foxy-stoat

https://forums.moneysavingexpert.com/discussion/5158783

You asked similar questions a year ago....did you start saving in Jan 2015 for the future works/architect fees etc etc?

Clive_Woody

You may want to get more than a rough estimate of costs before looking for loans. I would suggest saving up enough to afford to get plans drawn up for what you want, then use these plans to get accurate costs. Then start figuring out how you can borrow the money.

Also with a baby on the way have you figured in the reduction in earnings during mat-leave and whether you could still pay the mortgage, current loan and new loan repayments?

marc81

foxy-stoat wrote: »

https://forums.moneysavingexpert.com/discussion/5158783

You asked similar questions a year ago....did you start saving in Jan 2015 for the future works/architect fees etc etc?

Unfortunately I wasn't able to save much last year as I was trying to pay off some of my debts to get myself in a better position for lending this year. I do have enough to cover the architect and planning/building reg fees, just not the work itself.

Clive_Woody wrote: »

You may want to get more than a rough estimate of costs before looking for loans. I would suggest saving up enough to afford to get plans drawn up for what you want, then use these plans to get accurate costs. Then start figuring out how you can borrow the money.

Also with a baby on the way have you figured in the reduction in earnings during mat-leave and whether you could still pay the mortgage, current loan and new loan repayments?

We have an architect drawing up the plans at the minute, we've had an initial draft but need to amend some things and speak to the neighbours before submitting them. Once we have the plans i'll get some actual costs from builders as you rightfully point out, i'm just trying to get ahead of the game with knowing how we can finance it, a rough guide.

My wife has already been saving to cover the reduction when on mat leave so we should not have a problem covering additional lending.

Thanks for you responses.