Requested additional loan on Santander mortgage - offered considerably less

Superclarkkent

We bought our house in January, a fixer-upper, with a 45% LTV Mortgage.  We had a fairly large lump of cash left over which we planned to spend on an extension and refurb, and kept the mortgage fairly low due to uncertainty over the economy, jobs etc not wanting to over commit.  We planned to have a GF extension done within the first year and then borrow more in a couple of years to do a loft conversion.

We both started new jobs over the summer and our combined salaries increased about 20%.  The building work we had planned was looking to be more expensive than originally thought/we decided it would make sense to do more work than originally planned to avoid further disruption down the line.  As we'd both taken decent pay increases we thought we would increase our mortgage now.

We did our application online, requesting £165k - their affordability calculator suggested we could borrow an additional £245k so well within affordability.  We both have very good credit ratings which have recovered after the slight dip following taking out the initial mortgage.  We received the offer in principle and sent over all of the requested info, proof of salary, address etc etc.

On Friday we received a notification that they would only offer us £63k, more detail to follow via post.  We're totally confused as to why they will only offer so little.  I called them and the person on the phone said she didn't know what the reason was but has requested that our case manager call me back to explain the reasons.

Can anyone think of any obvious reason that we're missing, or suggest whether it is possible to get them to reconsider?  The only thing we can think is we are moving into rented property while the builders are in and that they might consider the rent will affect our affordability - but we specifically borrowed enough to cover the rent as well and told them as much.

Thanks in advance.