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Mortgage options for house move+renovations
patchyX2
Posts: 121 Forumite
I'm hopefully moving house in the next month or two. If everything goes to plan, I'd be porting our existing mortgage of 65k (fixed until Feb 2025), to the new home.
Shortly after moving in, I'd like to do some renovations on the house which will require a new mortgage of ~180k on top of the existing mortgage.
The problem is I don't know when I'll need the money; it will depend on the availability of the builders. Let's assume someone could start within 18 months of moving in.
Here's what I think my options are:
1) Move onto the SVR when my deal ends. Stay on this until just before the building work starts, then take out a new mortgage.
2) Take out a new fixed rate mortgage when my deal ends, including the amount to cover renovations.
3) Take out a new fixed rate mortgage when my deal ends to cover just the existing balance. Just before building work starts, take out an additional mortgage to cover the extra I need. (Would result in 2 mortgages as ERC's on the first deal would make paying that off early too costly)
4) Take out new tracker mortgage when my deal ends to cover just the existing balance. Just before building work starts, pay off the tracker deal (as there's no ERC), and take out a new fixed rate deal for the amount I need.
Option 1 I think will turn out to be quite costly unless the builders can start quickly.
Option 2 seems silly as I'd likely be paying the high rate unnecessarily for a while before the work starts.
Option 3 I think would be the cheapest option, but I'm not particularly keen on having 2 separate mortgages - I'd prefer to have just the one mortgage for the sake of simplicity.
Option 4 means I can stick to just one mortgage, but the initial tracker rate will almost certainly cost more than the fixed rate option.
Are there any other options to consider? Any thoughts on the above? Are there any issues with options 3 and 4 due to changing mortgages multiple times within a relatively short timeframe?
The only other thing to throw into the mix is that I do have some additional money that I could temporarily dip into (up to 40k), but I'd need to replenish that within a year or so. Not sure if that would make option 1 more palatable?
Shortly after moving in, I'd like to do some renovations on the house which will require a new mortgage of ~180k on top of the existing mortgage.
The problem is I don't know when I'll need the money; it will depend on the availability of the builders. Let's assume someone could start within 18 months of moving in.
Here's what I think my options are:
1) Move onto the SVR when my deal ends. Stay on this until just before the building work starts, then take out a new mortgage.
2) Take out a new fixed rate mortgage when my deal ends, including the amount to cover renovations.
3) Take out a new fixed rate mortgage when my deal ends to cover just the existing balance. Just before building work starts, take out an additional mortgage to cover the extra I need. (Would result in 2 mortgages as ERC's on the first deal would make paying that off early too costly)
4) Take out new tracker mortgage when my deal ends to cover just the existing balance. Just before building work starts, pay off the tracker deal (as there's no ERC), and take out a new fixed rate deal for the amount I need.
Option 1 I think will turn out to be quite costly unless the builders can start quickly.
Option 2 seems silly as I'd likely be paying the high rate unnecessarily for a while before the work starts.
Option 3 I think would be the cheapest option, but I'm not particularly keen on having 2 separate mortgages - I'd prefer to have just the one mortgage for the sake of simplicity.
Option 4 means I can stick to just one mortgage, but the initial tracker rate will almost certainly cost more than the fixed rate option.
Are there any other options to consider? Any thoughts on the above? Are there any issues with options 3 and 4 due to changing mortgages multiple times within a relatively short timeframe?
The only other thing to throw into the mix is that I do have some additional money that I could temporarily dip into (up to 40k), but I'd need to replenish that within a year or so. Not sure if that would make option 1 more palatable?
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