Home improvement finance

jolester

Hi,

I’d welcome any advice on my situation please. Sorry for the long post, I’ll bullet point as it may make it easier than me writing a novel ! 

Bought house in April 2018.
Always knew the house would need extending and improving. 

April 2020 remortgaged with a 5 year fix. Intended to overpay each month by £500 for 5 years, if this was successful then was happy to take out finance of £500 per month for home improvements. 

To date, have easily been able to overpay.

My husband has been given a promotion at work, starting January 2022. This will give an additional 1000 take home each month, plus an additional bonus each April. 

He now wants to start the home improvements sooner than the five year plan.

The current mortgage is set to be repaid over 30 years so I want to continue to overpay so that I’m not 70 when the current mortgage is paid off.

We would like to borrow approx 100k

Some questions…

As we don’t want to be paying the loan for 30 years are we best to go outside of the mortgage?

are we best to continue over paying on the mortgage? or put this £500 towards paying off an external loan earlier, then divert funds back to overpaying on mortgage once loan finance is clear? 

Add the finance (if possible) to the mortgage and keep overpaying as much as we can to bring the loan and mortgage term down?

any other advice?

thank you 

 

[Deleted User]

It all depends on the figures. Calculate what you would pay on the various options.

Ultimately, you then want to overpay the most expensive debt.

pramsay13

I think you will struggle to get a loan for 100k unless it is tied to the house and it will depend on the figures.
It might be easier to re-mortgage and take capital out of the house and then overpay as much as you can afford.
Presumably the improvements will increase the value of the house. 

jolester

pramsay13 said:

I think you will struggle to get a loan for 100k unless it is tied to the house and it will depend on the figures.
It might be easier to re-mortgage and take capital out of the house and then overpay as much as you can afford.
Presumably the improvements will increase the value of the house. 

Thanks for your comments. 

The outstanding mortgage is 375k, current valuation circa 500k. 

The improvements would make the house value in the region of 750k-850k. 

I would imagine anyone offering us the finance would want to secure it against the property, also a reason I’d like it paid off sooner and not tied alongside the mortgage 

[Deleted User]

You're not going to be able to secure it against the property with that little equity.

Look to do the work in stages and save/borrow smaller amounts as you go.

Sncjw

Are you planning to sell the house in the future. Also think of if the higher valuation will affect anything like if you need care needs in the future.