Re-Mortgage to finish extension

70sthrowback

Hi All,

wondering if anyone has been in a similar position or has advice on what I am thinking here.

I am just about to start a large extension which will practically double the size of our house. We bought the house just over a year ago with this in mind, so kept back some capital, this plus savings means we have enough money to build the shell to 1st fix, but not much more than this.

Left to finish will be a new kicthen, en-suite in the master bedroom and decorate / carpet throughout, which all adds up. We could wait to do this and save, but I was thinking about re-mortgaging to get some cash out to finish everything off, rather than waiting several months and doing it in dribs and drabs.

I currently have a mortgage with Nationwide (2 year fix ending May 2017) and spoke to them about it. They don't foresee any issues with this, it would be a separate mortgage for the extra borrowing and the valuation would be free, affordability is not an issue. However as the house will not be fully finished, the value will not be as high as when finished but this coupled with house inflation I am pretty confident it will be more than enough. The intention is that this will be a mortgage without any ties, as once my fixed deal ends in May 2017, with a finished house I was then thinking of merging the 2 mortgage products into a new single one, get a new valuation based on a finished house and hopefully lower the LTV.

Has anyone else done this, any pitfalls, advice?

Thanks in advance

kingstreet

You are getting a further advance, not remortgaging and the rate will be based on Nationwide's additional borrowing rates which are not as keen as their others.

When finished you will need to leave nationwide to consolidate the two sub-accounts into one as there is no way Nationwide can do that.

70sthrowback

Thanks Kingstreet, appreciate your professional opinion on this, good clarification on additional borrowing.

To give the complete picture which may or may not complicate matters. We actually have 2 products currently, the 2 year fix which I mentioned, but also an older product which went on to a Tracker at 2% above the BoE a few years ago. From what you are saying it makes my decision over what to do in May 2017 easier which is to move elsewhere and combine all 3 products,

Back to the additional borrowing, do you see any issues with this?

kingstreet

Only if the LTV based on current value takes you above 80% as that's Nationwide's maximum.

You won't get the improved value taken into account until after it's completed.

70sthrowback

ok good to know. Appreciate you taking the time to reply