Funding an extension and new flat

aj9648

Hi
I am looking to start on my extension in the next few months. I also want to buy a flat - initially we will live there while the building work is happening but longer term it’s for renting
we have a house - no mortgage and worth around £400k. The extension and flat will cost around £160k. I have a couple of questions:
1) can I get one single mortgage to cover both the extension and flat or will it have to be two separated??
2) can I get a mortgage against my existing house and can I get away without putting a deposit down? Currently all my spare cash is going in a SIPP 
thanks 

dimbo61

You own a £400K property and I guess you also work ?
If you earn enough to get a £160K mortgage and are young enough to repay it before your pension age I am sure it's possible.
One for a mortgage broker.
You will pay extra stamp duty 

aj9648

Yes I have a salary - joint £100k

aj9648

Ps - I am 40 years old 

dimbo61

Well then find yourself a mortgage broker.
I would also like to say I love Offset mortgages and they may well help you achieve the extension and purchase of the flat.
You borrow the £160K and put money into offset account. Hence your paying the mortgage back each month but little interest.
Buy flat with Cash and leave rest in offset account.
Builders ask for money in stages !
First stage say footings ! You pay out of offset account.
Second stage upto roof level so all the brickwork ! You pay out of offset account.
You can keep topping up offset account from your spare money each month.
If you have a joint income of £100K you can quickly replace the funds used to build the extension.

aj9648

dimbo61 said:

Well then find yourself a mortgage broker.
I would also like to say I love Offset mortgages and they may well help you achieve the extension and purchase of the flat.
You borrow the £160K and put money into offset account. Hence your paying the mortgage back each month but little interest.
Buy flat with Cash and leave rest in offset account.
Builders ask for money in stages !
First stage say footings ! You pay out of offset account.
Second stage upto roof level so all the brickwork ! You pay out of offset account.
You can keep topping up offset account from your spare money each month.
If you have a joint income of £100K you can quickly replace the funds used to build the extension.

I had never considered an offset mortgage- will look into this - thanks 

Grumpy_chap

I have an offset mortgage and it suits our needs very well.  It was very useful when we extended our house because of the flexibility.   
Interest rates are not the most competitive (but not the worst either).  
You do need to be extra disciplined for repayments.

aj9648

Hi - just an update on this and could do with some advice.  Offer on the flat we wanted to buy got accepted at £120k.  And also we have committed quotes from the builders for around £70k to start in Spring 21.  
Mortgage brokers are confident I can get the re-mortgage against my current property for the full value.  I have just been looking at stamp duty and looks like if its a buy to let then there is an additional surcharge.  However, we will be looking to live there for around 6months (maybe 12) if things take longer.  Then potentially rent out.  How does that work with a buy to let SD costs?

MWT

However you look at it, you will be buying a second residential property but not selling the first one so the 3% will apply.

If you changed your minds and sold your original house within 36 months you can get a refund, but otherwise it doesn't matter which one you are living in, it is merely owning 2 at the same time that triggers the SDLT obligation...

aj9648

If my wife bought the flat - would she be able to claim as a first time buyer? 

She is not on the deeds of main property, not paid a penny towards it and was never on the mortgage??