decisions help needed

DanRoss

Hi to all the team,

I need a little advice and hoping you can help.

My Father passed away in October with Covid 19, not a great time as we had lost my sister in June.

We have just sold his property for £172,000 shared between 2, £84,000.00 each.

I have a property with a small mortgage of £70k £500 per month and 12 years remaining.(we are going to rent this property)

I have also got planning permision for a 4 bedroomed house on my garden, this is going to cost £190,000.00 to build.

All the money we have is £155,000.00

My dilema is do i pay of my current mortage and borrow the remaing money.

Keep the mortgage payments and borrow a further £35k.

Borrow the whole amount for a self build mortgage.

Please can you help.

Danny 

[Deleted User]

I'm not a mortgage expert but wanted to share my condolences for the loss of your father and sister. What a challenging time for you and your family. I think it would be advisable to invest at least some of the money as mortgage rates are particularly low at the moment. It might be a good idea to have a balance between contributing to your mortgage/s and putting some money aside. Best of luck to you.

AdrianC

Your current mortgage lender have secured their loan against the entire property that you're now planning on breaking into two titles and developing - you need to speak to them before starting work.

TBagpuss

Talk to a mortgage broker and look at the differing costs of a self build mortgage and the current mortgage you have on the house. I assume that the £155K you mention is your savings plus inheritance, so to build the new property you will need a  an additional £35K  plus  a bit for contingencies . I suspect that remortgaging your current house may be less expensive than a self-build mortgage but a specialist broken will be able to talk you through the options.

How much equity do you have in your house? Do you have builders lined up, and what timescale are you looking at for the new build, as this mayu affect what choices you make about 

My guess is that your best bet may be to remortgage you home to raise the money you need to complete the build, then once you have built the new property, review again and decide whether a mortgage on the new property, or a BLT mortgage on the old, makes the better sense

DanRoss

Thanks for the reply, My current LTV is 26%,(House is worth £275000). builders are getting there quotes in the next 7 days.
Didnt know about asking my lender about the new build to thanks for that.
Time scale is not a major issue but i would like to start is ASAP but been advised build materiels are very high at the moment.
we have been told we will be able to rent my current property for £800 per month.