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Additional borrowing for extension
ritzman
Posts: 30 Forumite
Hi, hoping for some advice.
We have just about outgrown our house and are getting an extension, as the cost to move is too high and love our location.
House is worth about £290k and we have just £50k mortgage, with £40k savings and looking at get another £50k. This is where gets a bit more complicated, unfortunately we just remortgaged last year so are stuck with ERC if we leave the TSB of 5%.
If we remortgage with another lender it works out at about even after 5 years, although monthly payments will be lower, as TSB additional borrowing rate is 3.29%:eek:
I'm in the mindset of keeping the committed monthly payments as low as possible and also back of mind is dd and ds will be at uni age in 7 years time, so would like the option of some savings available, so had considered the dreaded interest only for the extra £50k (keep current on repayment) but also pay £2500 a year into a S&S ISA. Then in 5-6 years have a choice when remortgaging. My pension lump sum would cover the £50k interest only if worse came to it.
The property should be worth about £370k when work completed after consulting a couple of EAs, so LTV is low.
Sorry for brain dump:o
We have just about outgrown our house and are getting an extension, as the cost to move is too high and love our location.
House is worth about £290k and we have just £50k mortgage, with £40k savings and looking at get another £50k. This is where gets a bit more complicated, unfortunately we just remortgaged last year so are stuck with ERC if we leave the TSB of 5%.
If we remortgage with another lender it works out at about even after 5 years, although monthly payments will be lower, as TSB additional borrowing rate is 3.29%:eek:
I'm in the mindset of keeping the committed monthly payments as low as possible and also back of mind is dd and ds will be at uni age in 7 years time, so would like the option of some savings available, so had considered the dreaded interest only for the extra £50k (keep current on repayment) but also pay £2500 a year into a S&S ISA. Then in 5-6 years have a choice when remortgaging. My pension lump sum would cover the £50k interest only if worse came to it.
The property should be worth about £370k when work completed after consulting a couple of EAs, so LTV is low.
Sorry for brain dump:o
0
Comments
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As the ERC is only going to be £2500, just remortgage with another lender that allows the release of £50,000 equity you need. You should be able to get a better rate that would offset the £2500 charge anyway.0
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foxy-stoat wrote: »As the ERC is only going to be £2500, just remortgage with another lender that allows the release of £50,000 equity you need. You should be able to get a better rate that would offset the £2500 charge anyway.
That was my original thought, but went to Skipton (had best available rate recommended by indy FA) and their mortgage advisor advised against this, saying only in the best case scenario would i be better off by less than £100 over 5 years, anything other would be worse off.0 -
Depends how much value you put on where you live. Personally if my family has outgrown the current property and wanted an extension then £2500 is just added to the cost of the build.
Or wait for 5 years then do the extension, seems a small price to pay to get cracking with it.0
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