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How to finance an extension?

(6 Posts)
BerryAddiction Thu 30-Jul-15 09:32:50

We've only lived in our house for 2 years and are in a fixed mortgage for another 3. We have a conservatory that is very old and really we'd like to demolish it and have a 2 storey extension so instead of a living/dining room we could have 2 separate rooms and DDs box room above would be a decent size.
I dont know much about it but after 3 more years of paying the mortgage I think we probably won't have enough/any equity in the house to borrow more. Would a loan be an option or is that a bad idea?
Any thoughts?

TeddyBee Thu 30-Jul-15 09:54:53

A loan would be a very expensive way of finding it. I would save over the next three years and then try to remortgage for a higher sum to cover the cost. We remortgaged to do ours and it was the cheapest way to take on the extra debt. We ran over budget and had to borrow to complete it and those repayments are crippling us (£600 a month just on a £27k loan).

mandy214 Thu 30-Jul-15 10:08:16

I also think it is a bad idea to get a loan to do it - even if you could. Being part way through this process (at the point of having got planning permission and getting quotes for a rear extension) I'd be surprised if anyone would lend at the level you'd need.

You can borrow more from your mortgage provider, which would run alongside your mortgage (so you wouldn't have to wait for the 3 years to expire) but that is obviously dependant on having enough equity in the property and passing all the eligibility / affordability checks for the loan.

We bought our house about 5 and a half years ago with the intention of extending after a couple of years. As it turned out, what we wanted to do was much more expensive than we thought and actually we had no way of raising that money.

Fortunately for us, house prices have increased significantly where we are in the last 2 years probably and we've just re-mortgaged to release enough equity to do it. Actually, because we've paid off a chunk of the mortgage off, and interest rates are currently very low, our mortgage repayments have only gone up by a tiny amount even though we've borrowed quite a lot more.

So long winded way of saying that perhaps you're going to have to wait until you have more equity in your property.

GreyBird84 Thu 30-Jul-15 12:47:54

We will end up borrowing more on an equity release loan which will run alongside our fixed rate from our current provider to finish ours.
As Mandy says we will have to go through affordability checks again & I am now part time which is a concern but we should have more than enough equity.
I def wouldn't go down the loan route and re-mortgaging isn't an option as we have too long to go in our fixed rate.

BerryAddiction Fri 31-Jul-15 10:03:28

Thanks for the replies, will continue to save and wait for the equity to increase then go from there

TheUnwillingNarcheska Fri 31-Jul-15 12:15:53

We saved for it. As I am the main spender (am SAHM so shop for food/clothes and shoes for DCs etc) I could completely control it. You would be amazed at how little you can spend when you want something badly enough.

I didn't buy any new clothes for me as I didn't need them, just lived with what I had which was plenty. Meal planned and only bought the food we needed. Didn't eat out anywhere near as much as we used to. We also didn't have a holiday abroad for a few years which enabled us to build our dream kitchen extension 2 years ago.

Every day I still walk into it and feel the love. It was worth the non-spending on stuff we really didn't need and that mindset has continued and bought me a brand new car, dream holidays etc

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