Financing a loft conversion

2vander

I'm hoping for some advice on the best approach to organising finance for a loft conversion.

We have just purchased a new build property in Hertfordshire and plan to extend into the loft. The approximate cost will be £20-25k. We have a 2 yr fixed repayment mortgage until March 2018.

We'd like to complete the work prior to remortgaging in March 2018 to get the benefit of a better LTV. I'm thinking a personal loan is the way forward to complete the work and then pay this off in full when we remortgage - provided the value of the house doesn't drop overall when balancing increasing property prices in the area and the inevitable drop in value of a new build over the first few years.

The house has been built by a local reputable developer to a good standard rather than one of the national house builders and so I'm factoring in a 10% drop over the first two years but a gain of about 20% due to the extra bedroom the loft conversion will provide. Giving a net 10% increase based on today's prices after the conversion (Please tell me if these figures are poor estimates).

Is an unsecured personal loan the way to go, or does anyone know whether there cheaper/better finance options out there for this in the form of a mortgage that would factor in the increased LTV prior to the work taking place? We'd look to have the work complete in late 2017/early 2018 to keep the loan period to a minimum.

Has anyone been in a similar position?

Thanks in advance...

RhysHSCC

A couple of options would be

1. Unsecured personal loan, short term, high repayments, likely higher interest rate.
2. Additional borrowing from mortgage lender (if you have just completed thenyou may have to wait a while to demonstrate you are repaying before being considered)

With the 2nd option, you have the option to take it over a much long term, and your payments will more than likely be lower as well as the interest rate.

However by taking it out over a longer term (say 30 years compared to 5 for a upl) you will likely be paying back much more overall.

Can you afford the repayments of a upl?

There may be a couple more options apart from what I've mentioned, but thought I'd take the 2 most common approaches and give you food for thought.