Should I re-mortgage? House improvements needed and self-employed for less than 2yrs

weston800

Hi all,

I'm not sure how much info is required in order to get some advice so I'll go ahead and mention what I think is important.

My partner and I got our first mortgage in Feb 2018, we have a 2 year fixed rate deal at 2.50% (ends 31/01/2020) - currently paying £562 but will increase to 4.74% (£729) on 01/02/2020. Mortgage is over 30yrs. House cost £158,000 and we put 10% deposit down so had a mortgage of £142,200.

When we got our mortgage, we were both employed as PAYE; however, a month after our mortgage started my partner went self-employed as a sole trader. I still work PAYE full time. I'm not a qualified accountant but I do his accounts/invoicing and tax returns.

Our mortgage company, Principality have advised that we can switch rate from 31/10/2019 as this is 3 months before the current rate is due to end, however; we want to do house improvements so are looking at having a bigger mortgage. Principality have said that we don't need to re-mortgage as we can just apply for a top-up but as soon as I mentioned my fella being self-employed since only March 2018 they were reluctant to offer a top-up, they said I need a financial statement from a qualified accountant for my fella's self-employment as he has to be self-employed for 2 years. He won't have been self-employed for 2 years until March 2020 so I'm guessing it's better for us to not switch rate in Oct and instead to just pay the 4.74% rate for a couple of months in 2020 and then look at fully re-mortgaging with a new provider?
Is this my best option?

Or, if we do switch rate in Oct (in order to avoid paying 4.74% in Feb/Mar 2020) does this then mean that we're tied in with Principality again for a set period and then when we come to ask for more money in Mar 2020 (once my fella has 2 years self-employment) or even re-mortgage fully that we'll have to pay an 'exit fee' to Principality for exiting during the fixed rate period? I've read this can cost thousands!?

We're not desperate to do home improvements so we're happy to wait until 2 years self-employment is on the books but I just don't know what's the best route to take? My fella has also added a driveway which I imagine will have increased the value of the house so do we have to pay to get the house re-valued?

The other thing is, how much money are we likely able to borrow? Does it depend how much money we put down for the deposit and also how much money we'll have paid off in the 2 year period? I'm guessing we'll need around £20K to do everything we want.

Thanks, any help at all is greatly appreciated.