Extension / Mortgage Question

NewMoneySaver13

Hi All,

Hoping this is the right area to post and somebody can answer my question regarding a possible extension to a house and how that might effect a mortgage?

This is the example that I will use:-

Before Extension

Value of property - £300,000
Outstanding Mortgage - £150,000
Equity - £150,000

After Extension

Extension cost - £50,000
Value of property - £400,000
Outstanding Mortgage - £150,000???
Equity - £250,000

So despite the initial outlay of spending out to complete the extension works, as a result of the extension works the property value has increased. This will also see an increase in the equity held within the property and a decrease in the overall LTV.

Am I right in assuming that this would not have any effect with an increase or decrease on the mortgage, with the mortgage amount remaining at £150,000.

Thanks in advance.

amnblog

Your mortgage rate is based on the loan to value when you took the rate.

Therefore you are 'right in assuming that this would not have any effect with an increase or decrease on the mortgage, with the mortgage amount remaining at £150,000. '