Increasing loan on remortgage

halfajack

Back when I first bought my flat, I had help with the deposit from a very generous family member. This was intended as a gift and a letter was sent to the lender to confirm it wasn't expected to be repaid. However, I do want to repay the favour as it has really help set me up financially and the family member has children now. Taking the increase in my property's value into account, I want to give him £40k and have been saving towards this gift for years, but am still a long way off. The longer I wait to repay, the more I will morally feel I need to give so I would like to get it done fairly soon.

The deal on my current mortgage ends in January and I thought this would be a good time to consider borrowing some extra money. If I was to ask for 25-30k cash from my new mortgage deal, is it likely to be granted without too much fuss (presuming my financial situation at that point is still deemed OK and LTV would still be lower than when I got my first mortgage)? I have heard people say lenders will give extra for 'home improvements' etc but wondered if they look carefully into what the money is being used for.

If the above is something that seems likely to happen, I wondered if it would then be sensible to put most of my savings into overpaying my mortgage (without going over ERC limit) so that when it comes to remortgaging, the LTV is lower still, or am I better to just keep it in savings?