I've name changed, as I want to be fairly detailed about the financial issues, but slightly less identifiable than I would be from my other posts!
Anyway, we bought our house 3.5 years ago - it's a typical three bed 1930's semi, with a loft conversion and the two reception rooms knocked through. The kitchen is teeeny and there is one bathroom with a loo in it. The loft conversion is terrible - no insulation, dodgy wiring and plumbing, two tiny rooms, freezing in winter, boiling in summer and the stairs up to it are open tread and lethal. I can't put one of my kids up there as it is and it doesn't really contribute much to the value of the house (particularly as it's a pig ugly back and side dormer conversion which would NEVER get planning permission now).
We paid £350k for it and have about £215k and 22 years left on our mortgage. We have been left some money which we propose to spend on redoing the loft conversion and building a side and rear extension. We've had plans drawn up etc and quotes (which seem to get higher every time they're redone, sigh) and the new house would have four/five bedrooms, two with ensuites, a new family bathroom and a downstairs loo, utility room and bigger kitchen. We've got a rancid double garage to the side of the house, which we'd demolish and build on, and a massive back garden, so all in all it would sit well within the plot, make it a more aesthetically appealing and balanced house (as opposed to the current 5 bedrooms to 1 toilet scenario) and would mean that we could stay there for another five to ten years.
It would however cost £110k. We have £30k of that, but would need to borrow £80k. I earn £50k, OH earns about £30k (he is self-employed) variable, but never less than £1k a month. Bank is perfectly prepared to lend us the extra money but would fix us into a 2yr mortgage deal at quite a high rate of interest because of course they can't take the new value of the house into account until it's all done and dusted. We can afford to pay the much increased payments for six months while the work is carried out, but can't pay them for another eighteen months after that. Essentially the new payments would be around £1800 a month on our current valuation, but would drop to £1000 a month if the house was valued at £500k following the work (a four bed, two bath house with a postage stamp garden on our road sold for £460k two years ago, a six bed, three bath house went for £599k earlier this year so not an unreasonable estimate as they're all the same house, just extended in different ways). I've been wracking my brains to work out how to borrow more flexibly so that we can remortgage in six months on a lower interest rate, but I can't work out how to do it. I can't be the only person who's had this problem can I? Bank have been massively unhelpful but that was the branch, I haven't called the mortgage centre. We pay around £1200 a month now, and could pay £2-300 more a month for a couple of years, but not £600 more a month for a couple of years.
Any ideas/suggestions/experiences? I'm so stressed about this now. Have been planning this for over a year, spent so much money on plans etc and never really thought about not being allowed to change our mortgage for two years. Idiot.
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Funding an extension and mortgage rates/LTV
14 replies
Buildershateme · 27/06/2013 15:03
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