Is it Worth Taking Money Out of your House??

If you ask for further borrowing, they will assess your affordability again and so you would need to earn enough to be able to satisfy their criteria on your salary alone.

As Beanie says,if you are asking for further advances they will reassess affordability.

In terms of 'is it worth it' - that's a personal matter. How important is it to you to have the extra space? Is it worth it to *you*, taking into account the extra mortgage costs?

Adding an extension to your house *might* increase the value of the house when you come to sell it, but there are no guarantees that it would increase by as much as the amount you spend on (particularly when you factor in the interest you will pay on the extra borrowing) so I would be inclined to look at it more from the perspective of:
1. Can I afford it? If yes, then
2. Is the benefit to me and my family worth the extra cost?

As the property has gone up in value it may also be worth looking into whether remortgaging for the same amount is worth while, given that you will now have a better LTV. If you can get a better deal you could then save the difference in payments towards an extension or other work., if you want.

I would still be very very cautious as house prices are very high compared to incomes and if there is a housing slump then you could be in serious trouble.
If you have sufficient equity to cover a significant drop in house prices and an increase in interest rates then go ahead. I do not see a slump in housing for a couple of years but interest rates will rise eventually and could you cope then?

Also be aware of the new Mortgage Market Regulations due for implementation in April 2014, which is placing high responsibility on the lender for much more robust emphasis on affordability assessment.

This will also include a stress test (ie which is to verify the mortgagor being able to afford the mge post cessation of any product rate), which means that this could be a future factor that stagnates or even drives down prices as less peeps will meet the tighter restrictions for higher lending ..... (although TBH mges were assessed this way, with low multiples before the massive boom, which was fuelled by easier and higher lending availability and BTL demand).

So just be mindful of this if you're increasing your mortgage to high'ish levels, as although the above re the MMR fallout is a guess from my part, I just think it may be worth treading carefully re how much pressure you put on yourselves and home value, as you won't want to end up at parity or even neg equity as a result of the new regs depressing future demand and values (although of course what you may lose on the swings you may gain on the roundabouts !)

This post is really just to advise you to be cautious increasing your mge debt .... esp if you income is limited (ie you won't be able to throw money at the debt to reduce the LTV)

Holly x

Don't get too excited. The Estate Agent tells you what he thinks you want to hear to get the sale contract.

The valuer's opinion is what counts.

Check on Zoopla what similar to properties in your area are actually selling for.