Best way to borrow 50 to 60K

Sunflower85

Hi all, 
New to posting but long time lurker. 
I'm hoping to do an extension to my 2 bedroom property to add another 2 bedrooms and make a lovely kitchen family room.I've been quoted 120K minimum for the work. I have 65K saved and I'm trying to get as close as I can to 120K through borrowing. My current house value is 475.000 and my mortgage is 282.500. I can't borrow more because I'm already on 5x my income ratio. The house should be offers over 750.000 when complete based on sold prices. Once the work is done (or partially done), I'm aiming to rent a room out to the local school and they pay £1300. 
Regardless of that, I'm currently saving about £1200 per month of my salary so could afford repayments.
I don't have any other debt apart from my mortgage which is fixed for next 4 years and for which I pay £950 per month. My salary is 55K so roughly 2.750 per month after student loan paid.
Would a secured loan be my best option? Any other suggestions? 
I've I've 3 years before my planning permission expires so would hope to get started before then but could potentially save more for a bit longer. I'm attracted by the security of having rooms to rent if needed.
Would love to get any thoughts about best loan to go for.

Grumpy_chap

There was a recent thread asking some very similar questions, with some uncanny similarities, so it may be helpful for the OP to read it through as they may glean some useful insight:
https://forums.moneysavingexpert.com/discussion/6375668/loan-options-for-60-000/p1

An unsecured loan of £60k (full years salary) is unlikely to be available.

Extending the mortgage is not available because of the salary multiple.

A secured (against the property) loan from another lender is unlikely to be available because the current mortgage lender will not be likely to agree a second charge against the property.

Unless the OP has other assets that can be sold or used as loan security (none were mentioned), then obtaining the amount of finance required to do this project seems highly unlikely.

The big risk to a finance company is not only the OP's circumstances for meeting the repayments (which may change) but also the OP potentially running out of money partway through the project and leaving the house in an un-sellable state.

For a £120k project, the OP does have a good proportion of the funds already available (£65k) and can £12k (or a bit more) per year.  It might be possible to get the project going if the OP is willing to reduce some costs (specifications), do some works themselves and stage the project:
 - Would the current available funds allow the OP to get the walls and roof built for the extension?
 - Then add windows and knock-through as the next year's-worth of savings can be released?
 - Then internal fit out, wiring, heating
 - Then finish plaster and decorate
 - Then the kitchen
 - Then make good the original house and redecorate

There would be some tunes to play on that sequencing but it would be a way to get the project underway so satisfying the planning time limit plus securing the first £65k of work at today's prices. 
(Bit of a judgement on price movements - will inflation mean prices rise, or will recession mean demand and rates fall?  I'd err on the side of securing the rate and the work now, kind of bird-in-hand-better-than-bush thinking.)

I am sure the OP would prefer to just get the job done rather than it be a phased project over 5 years, but the latter might well be the only way this can move forwards.

Good luck OP.

Sunflower85 said:

Hi all, 
New to posting but long time lurker. 
I'm hoping to do an extension to my 2 bedroom property to add another 2 bedrooms and make a lovely kitchen family room.I've been quoted 120K minimum for the work. I have 65K saved and I'm trying to get as close as I can to 120K through borrowing. My current house value is 475.000 and my mortgage is 282.500. I can't borrow more because I'm already on 5x my income ratio. The house should be offers over 750.000 when complete based on sold prices. Once the work is done (or partially done), I'm aiming to rent a room out to the local school and they pay £1300. 
Regardless of that, I'm currently saving about £1200 per month of my salary so could afford repayments.
I don't have any other debt apart from my mortgage which is fixed for next 4 years and for which I pay £950 per month. My salary is 55K so roughly 2.750 per month after student loan paid.
Would a secured loan be my best option? Any other suggestions? 
I've I've 3 years before my planning permission expires so would hope to get started before then but could potentially save more for a bit longer. I'm attracted by the security of having rooms to rent if needed.
Would love to get any thoughts about best loan to go for.

Sunflower85

Grumpy_chap said:

There was a recent thread asking some very similar questions, with some uncanny similarities, so it may be helpful for the OP to read it through as they may glean some useful insight:
https://forums.moneysavingexpert.com/discussion/6375668/loan-options-for-60-000/p1

An unsecured loan of £60k (full years salary) is unlikely to be available.

Extending the mortgage is not available because of the salary multiple.

A secured (against the property) loan from another lender is unlikely to be available because the current mortgage lender will not be likely to agree a second charge against the property.

Unless the OP has other assets that can be sold or used as loan security (none were mentioned), then obtaining the amount of finance required to do this project seems highly unlikely.

The big risk to a finance company is not only the OP's circumstances for meeting the repayments (which may change) but also the OP potentially running out of money partway through the project and leaving the house in an un-sellable state.

For a £120k project, the OP does have a good proportion of the funds already available (£65k) and can £12k (or a bit more) per year.  It might be possible to get the project going if the OP is willing to reduce some costs (specifications), do some works themselves and stage the project:
 - Would the current available funds allow the OP to get the walls and roof built for the extension?
 - Then add windows and knock-through as the next year's-worth of savings can be released?
 - Then internal fit out, wiring, heating
 - Then finish plaster and decorate
 - Then the kitchen
 - Then make good the original house and redecorate

There would be some tunes to play on that sequencing but it would be a way to get the project underway so satisfying the planning time limit plus securing the first £65k of work at today's prices. 
(Bit of a judgement on price movements - will inflation mean prices rise, or will recession mean demand and rates fall?  I'd err on the side of securing the rate and the work now, kind of bird-in-hand-better-than-bush thinking.)

I am sure the OP would prefer to just get the job done rather than it be a phased project over 5 years, but the latter might well be the only way this can move forwards.

Good luck OP.

Sunflower85 said:

Hi all, 
New to posting but long time lurker. 
I'm hoping to do an extension to my 2 bedroom property to add another 2 bedrooms and make a lovely kitchen family room.I've been quoted 120K minimum for the work. I have 65K saved and I'm trying to get as close as I can to 120K through borrowing. My current house value is 475.000 and my mortgage is 282.500. I can't borrow more because I'm already on 5x my income ratio. The house should be offers over 750.000 when complete based on sold prices. Once the work is done (or partially done), I'm aiming to rent a room out to the local school and they pay £1300. 
Regardless of that, I'm currently saving about £1200 per month of my salary so could afford repayments.
I don't have any other debt apart from my mortgage which is fixed for next 4 years and for which I pay £950 per month. My salary is 55K so roughly 2.750 per month after student loan paid.
Would a secured loan be my best option? Any other suggestions? 
I've I've 3 years before my planning permission expires so would hope to get started before then but could potentially save more for a bit longer. I'm attracted by the security of having rooms to rent if needed.
Would love to get any thoughts about best loan to go for.

Thank you for your advice. Its a tricky one and no, I don't have any other assets I could use. I think a staged build will be the only way and I will try and get 20K of unsecured loan to help to bring my total up to 85K. The only issue I have is that the extension is interlinked with other bits of the house so it's quite difficult to work out the stages. It's a wraparound type extension.  Will keep working hard on it and see how far I get.

MEM62

Sunflower85 said:

Grumpy_chap said:

There was a recent thread asking some very similar questions, with some uncanny similarities, so it may be helpful for the OP to read it through as they may glean some useful insight:
https://forums.moneysavingexpert.com/discussion/6375668/loan-options-for-60-000/p1

An unsecured loan of £60k (full years salary) is unlikely to be available.

Extending the mortgage is not available because of the salary multiple.

A secured (against the property) loan from another lender is unlikely to be available because the current mortgage lender will not be likely to agree a second charge against the property.

Unless the OP has other assets that can be sold or used as loan security (none were mentioned), then obtaining the amount of finance required to do this project seems highly unlikely.

The big risk to a finance company is not only the OP's circumstances for meeting the repayments (which may change) but also the OP potentially running out of money partway through the project and leaving the house in an un-sellable state.

For a £120k project, the OP does have a good proportion of the funds already available (£65k) and can £12k (or a bit more) per year.  It might be possible to get the project going if the OP is willing to reduce some costs (specifications), do some works themselves and stage the project:
 - Would the current available funds allow the OP to get the walls and roof built for the extension?
 - Then add windows and knock-through as the next year's-worth of savings can be released?
 - Then internal fit out, wiring, heating
 - Then finish plaster and decorate
 - Then the kitchen
 - Then make good the original house and redecorate

There would be some tunes to play on that sequencing but it would be a way to get the project underway so satisfying the planning time limit plus securing the first £65k of work at today's prices. 
(Bit of a judgement on price movements - will inflation mean prices rise, or will recession mean demand and rates fall?  I'd err on the side of securing the rate and the work now, kind of bird-in-hand-better-than-bush thinking.)

I am sure the OP would prefer to just get the job done rather than it be a phased project over 5 years, but the latter might well be the only way this can move forwards.

Good luck OP.

Sunflower85 said:

Hi all, 
New to posting but long time lurker. 
I'm hoping to do an extension to my 2 bedroom property to add another 2 bedrooms and make a lovely kitchen family room.I've been quoted 120K minimum for the work. I have 65K saved and I'm trying to get as close as I can to 120K through borrowing. My current house value is 475.000 and my mortgage is 282.500. I can't borrow more because I'm already on 5x my income ratio. The house should be offers over 750.000 when complete based on sold prices. Once the work is done (or partially done), I'm aiming to rent a room out to the local school and they pay £1300. 
Regardless of that, I'm currently saving about £1200 per month of my salary so could afford repayments.
I don't have any other debt apart from my mortgage which is fixed for next 4 years and for which I pay £950 per month. My salary is 55K so roughly 2.750 per month after student loan paid.
Would a secured loan be my best option? Any other suggestions? 
I've I've 3 years before my planning permission expires so would hope to get started before then but could potentially save more for a bit longer. I'm attracted by the security of having rooms to rent if needed.
Would love to get any thoughts about best loan to go for.

The only issue I have is that the extension is interlinked with other bits of the house so it's quite difficult to work out the stages. It's a wraparound type extension.  Will keep working hard on it and see how far I get.

That's the point at which a decent surveyor becomes your best friend.  Engage a QS and they will even make combined staged build / funding plan for you.