Short term lump sum from bank of mum & dad

Rhid

Be gentle im a newbie.

Essentially like to remortgage for extension. Like to borrow £300,000 to pay off existing £200,000 and fund build.

Can get £100,000 short term (6 mths) loan from bank of mum and dad. So was thinking of getting remortgage agreed (with 6 month to complete) then paying lump sum off current mortgage such that essentially overpay (ie keep monthly payments the same) massively for 6 months to reduce mortgage significantly. Then paying them back when remortgage finally completes six months later.

Meaning a saving of around £5000.

Does this seem right?
Can it be done?

getmore4less

Be careful you might need to reapply.

Why not take the 100k do the build then remortgage?

foxy-stoat

getmore4less wrote: »

Be careful you might need to reapply.

Why not take the 100k do the build then remortgage?

That would be the easiest way of funding the extension for you and the riskiest way for your parents.

Your lender may not agree to lend you the extra £100,000 to pay back a loan, then what?

How much is your property worth now and possibly worth after the extension?

Not sure what you achieve by:
So was thinking of getting remortgage agreed (with 6 month to complete) then paying lump sum off current mortgage such that essentially overpay (ie keep monthly payments the same) massively for 6 months to reduce mortgage significantly. Then paying them back when remortgage finally completes six months later.

Why not use the money you were going to overpay for the extension and borrow less...or where you going to use part of the £100,000 to overpay the mortgage only to borrow it back again?

Rhid

The new mortgage offer would be held open for 6 months. The old mortgage at that point would have reduced by £6000 due to overpayments resulting from reduced amount from lump sum. The lump sum would then be returned when new mortage completed.

Hope that makes sense (use lump sum to overpay then borrow back, end result saves £6000)

foxy-stoat

If it were me I would borrow less from the parents and in turn would reduce the amount you would have to remortgage by.

Suppose you need to compare your current LTV and interest rate vs the new LTV and interest rate.

getmore4less

What if this scenario happens.

Get the £300k offer, hold off for 6 month.
Pay down £100k
Lender reviews and changes their mind offer withdrawn.

Rhid

Does that happen often (that offer ls later withdrawn)?
Why would they do that?

Thanks for responses thus far.