Re-Mortgage Question

Declan1992

Hi,

A little confused here. Coming to the end of my fixed rate term in about 6 months time.

I’m considering going into the loft and creating an extra bedroom.

Now here is where I need a more insightful person to help.

If I was to get a loan for the work. When I come to remortgage will they then revalue the house like when I first got a mortgage? And if so. When I took the mortgage it was at 85% LTV @ a house value of £123,000.

Now if they then revalue it if that’s what happens at say £140,000 with the extra bedroom and other work done will my loan value then decrease and I’ll have more equity in the house?

Also if I was to consider doing this work, do I have to inform Halifax before I start this work to generally inform them or get permission?

davidmcn

They'll value it in its current condition, not what it will be worth after you do the work. And yes, you would need lender's consent to do major work like a loft conversion.

Declan1992

So if I do the work before I was to get it remortgaged they would obviously value it taking the work into account reducing my ltv and increasing my equity accordingly

MrCH

I think you would have to pay for a valuation to be done.
When I remortgaged are the end of my term I just used the valuation that my lender had as it was favourable for me without the hassle of having a valuation done. It dropped us into the LTV we wanted.

[Deleted User]

MrCH wrote: »

I think you would have to pay for a valuation to be done.
When I remortgaged are the end of my term I just used the valuation that my lender had as it was favourable for me without the hassle of having a valuation done. It dropped us into the LTV we wanted.

Generally only if you stick with the same lender. They hold an indexed valuation so if you want to dispute that you have to pay for a valuer (sometimes, a lot of lenders do it for free still).
If you are moving to a new lender on a remortgage, 99% of them will do the valuation for free

heston2014

Are you looking to remortgage with additional borrowing? We recently remortgage with the Halifax with additional borrowing for house improvements. We didn't require a valuation, but we do have a small mortgage and the LTV was less than 60% so Halifax didn't need to do a valuation. We remortgage and reduced the term but took out a 3 year Fixed to give us the option to re-evaluate if the shorter term is still manageable. We're not doing any major works, but as yours is a loft conversion, depending on if you're looking to do further advance which will be a sub-account to your existing mortgage (if you're sticking with the same lender), I think they will require consent and also estimated cost for the works.
If you switch lenders, then valuation will be carried out but like someone said, some offer this for free. I think it's treated the same was as taking out a new mortgage so same process.

Declan1992

Hi,

I looked at an option of additional borrowing however I thought a personal loan would be a cheaper option in the long term.

Also with Halifax you can borrow additionally but looking on there website it’s upto 85% LTV and since I took the mortgage only 18 months ago at that LTV it isn’t really an option.

I think my best option would be to get a personal loan for the work estimated and get it completed before I remortgage and get a valuation done if I stay with Halifax to obviously improve my ratio and maybe take me down a band and lock into a 3/5 year fixed hopefully so I can tie it in with loan repayments 15/20k over 5 years hopefully.

[Deleted User]

There are a few lenders who go up to 90% on remortgages for home improvements.

Either way whatever you do, please make arrangements to leave Halifax at the end of your deal. You will get a better deal from dozens of other lenders when comparing to their existing customer deals. Halifax are terrible for loyalty deals

Declan1992

I only went with Halifax at the time as they was the best rate on offer for myself and offered £1000 cashback also so it was a no-brainer.

I’ll be going to see my broker in 3 months so I’ll no doubt get the best advice and deal for my situation.

But when I had a quick look at there 5 year offer just it was 3.13%.

Thrugelmir

Declan1992 wrote: »

I looked at an option of additional borrowing however I thought a personal loan would be a cheaper option in the long term.

Loft conversions aren't cheap. Obtaing a personal loan of the neccessary size maybe a challenge.

Caz3121

Thrugelmir wrote: »

Loft conversions aren't cheap. Obtaing a personal loan of the neccessary size maybe a challenge.

indeed and it will likely increase the value of the property by less than the cost of doing it
https://www.houseup.co.uk/news/how-much-does-loft-conversion-cost/