Remortgaging for extension query

bargainhunter121

We are hoping to do a 2 storey rear extension on our home and are looking to remortgage And ask for additional funds to fund it. We would probably need to ask for around 32k. We have about 28k in savings we were going to use to start the process whilst the application was being processed (a little risky I know, but we’re on a time scale with another baby on the way). We have just under 6k remaining on our mortgage, so hopefully we should be approved ok. Our current bank however wouldn’t allow it due to covid restrictions (they have a restriction in place which meant we needed to be earning 90k per annum regardless). Nationwide wouldn’t let us without first having our mortgage with them for 6 months, but Santander were ok with it. I’ve contacted a broker to see what our options are. 

We were hoping not to have to borrow too much, so we’re thinking of getting the kitchen and bathroom ware using the offer of 5 years interest free payments rather than adding to the mortgage for these, does that sound reasonable?  All of this is a bit nerve wracking but we don’t think we can get away without doing the work in the long term. 

dimbo61

Two storey rear extension for £60K WOW.
I think the materials alone might be £60K.
All depends on size, location, access and local builders prices.
Consider an offset mortgage as you can ask for a bigger mortgage than you need and keep the funds in the offset account till needed in phases to pay for the work.
The so called Interest Free kitchens and bathrooms have inflated prices to take into account the " Free " interest saving.
Mortgage rates are very low and you have a huge amount of equity so should get a great deal from a lender

bargainhunter121

We’ve always been the type to save rather than borrow but yes, we’re wondering given the interest rates if it were better to borrow more. I’m slightly worried about it going over budget also so was wondering, how much do you think we should ask to borrow?  Would we better to remortgage for a bigger amount to pay for the kitchen and bathroom too instead of the 5 year interest free deals? The extension will be 3m x3.3m back, adding 190 sqft  if that’s any help. 

Thrugelmir

Have you been quoted a fixed price for the works? 

bargainhunter121

Well it’s a final price as far as I know, they’ve had their qs round who priced everything. We had another quote which was 4K more but this builder was recommended to us by our architect and gave us a cheaper quote. We have to set up a preliminary meeting in the next week or so to finalise the details. 

cw182

Which lender is it that insists on 90k income for a 32k mortgage? 

bargainhunter121

Danske bank. I told them we would have to leave them then, so unfortunately we've a bit of an early repayment fee too, but have no choice.

dimbo61

Please check again with Danske bank as they may have made a mistake 
Unless they want to close there mortgage lending and are looking for ways to get rid of customers

bargainhunter121

They said that for major works such as this, they only offer a self build loan which currently has this restriction. Its mad, even the person on the phone was saying that it doesn't make sense but they're hoping the restriction will soon be lifted. 

Thrugelmir

bargainhunter121 said:

They said that for major works such as this, they only offer a self build loan which currently has this restriction. Its mad, even the person on the phone was saying that it doesn't make sense but they're hoping the restriction will soon be lifted. 

Mortgage lenders don't want to be left with half finished projects on their hands in the current environment. Makes resale much more difficult.