Remortgaging now but extending house in 3-6 months

willbav

Right, here goes.
Our fixed rate mortgage is due to end next month so we want to remortgage now to avoid a jump in rate from 4.8% to 7.8%. Straightforward so far. However we're planning to extend our house and will spend c.£30-40k in around 3 to 6 months time.
The way I see it we have 2 options.
1) Remortgage now for an amount including the additional £30-40k and put the surplus somewhere earning interest until we need it.
2) Remortgage now for our current balance and then undertake a further remortgage in 3 to 6 months when we need the extra cash to pay the builders.

At the moment I'm inclined to pursue the 1st option for less paperwork and less fees (and to be honest less hassle). Has anyone made a similar choice?

Any thoughts much appreciated.

mrcow

Depends on how sure you are that you'll get the necessary permisisons for the extension and also how certain you are on the pricing for your extension (you don't want to borrow too little and be stuck with half a job).

We've remortgaged recently for an extension and it was a piece of cake tbh, although there was a fee involved.

Also, how flexible is your proposed mortgage? If you were to go with option one but borrowed more than required, would you be able to pay the extra back off the mortgage without penalties?

herbiesjp

You could look at a flexible mortgage as a third option.

This way you could either (depending on the lender and mortgage deal) borrow the extra amount from day 1 and pay straight back into the mortgage account, thereby not paying any interest on it. Or, go for a mortgage and get the mortgage agreed for the new total amount, but only draw down the re-mortgage amount you need at day 1, and then draw down the other funds as and when you need them.

Have a word with an adviser to explain these to you, as it could save you money in either paying a mortgage on an amount of money you do not need, or paying money on fees for a further advance - get it all done and ready from day 1


Hope this helps