borrowing for home improvements

lamialex

Hello,

I just bought a house with a 25 years mortgage that needs a lot of renovation. Part of the renovation is to add an extension or do a loft conversion which I will need to borrow £50k for it. Halifax is telling me in 4 months I can apply to borrow money on my mortage. Is that too early within my mortgage to borrow more money from the bank for home improvements? How does that work? Will i get money at the same rate as my mortgage? Should I look into borrowing somewhere else?
Thanks

K_S

@lamialex

- as you've been told, you'll have to wait a minimum of 6 months from completion before you can apply for a 'further advance'. This assumes that you'll have sufficient equity in the property to release 50k and stay within the max LTV (85% or 90% for Halifax, don't remember off of the top of my head)

- the rate will be what's available at the point in time 4 months on. Given that your current rate is probably from 5-6 months ago when they were much lower than today, the rate on your further advance is likely to be significantly higher.

- a further advance is likely to be the most cost-effective way to raise the cash compared to other options such as second charge loans, personal loans or other short term debt. This is a general statement of course.

lamialex

yes got my rate in November 21
and what is considered a sufficient equity by Halifax?

MovingForwards

Without knowing how much money you borrowed for your mortgage and the current value of the property, we can't say whether you've a 'spare' £50k to borrow from Halifax.

As K_S said "This assumes that you'll have sufficient equity in the property to release 50k and stay within the max LTV (85% or 90% for Halifax, don't remember off of the top of my head)"

lamialex

We borrowed £482000 from Halifax and the estimated property value from Halifax is £563500
and they give us an estimated equity of £84k, we purchased the house on the 18th of February 22

K_S

lamialex said:

We borrowed £482000 from Halifax and the estimated property value from Halifax is £563500
and they give us an estimated equity of £84k, we purchased the house on the 18th of February 22

@lamialex With a current value of £563k, 85% LTV is 478k, which you are already over. If Halifax allow you to release up to 90% LTV (and you meet affordability), you may be able to get 24-25k out at most. If they cap it at 85%, then there's no option for a further advance.

lamialex

very helpful, thanks