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Mortgage renewal with a view to getting funds to extend. Where do I start?

(6 Posts)
united4ever Sun 17-Jul-16 21:58:19

The Mortgage fix ends in December. I would like to extend but will need to borrow an extra minimum 70k to do so. However, my calculations are based on the crude £1500 - £2000 per square metre. It would be a two storey extension ideally to get a 4th bedroom but a compromise is to make it a single storey with pitched roof and skylights.

Anyway, I hear the accepted wisdom of the order to do it is: Architect, Planning, Builders. But where does the mortgage application fit into this? If the mortgage does not cover the costs of the builders quote then the whole thing will be postponed until the next time we come up for remortgage. I suppose then we will have our architects plans and planning consent in place for next time we remortgage but ideally I would like to do those things in the months preceding the extension being built.

Therefore, would it be a case of just using my crude estimate of the building cost to base my remortgage on and assuming it gets approved I then start the rest of the process. Or, can I get a builder round before any of this starts to see if my estimations are roughly in line with what I will need to pay them. Bit of a chicken and the egg scenario.

Also, If I apply for a remortgage and get the extra extension funds are they released at the time of the remortage (with interest payable immediately) whilst I may have several months before I have to pay the builder?

Sorry for such a basic question.

lanternlady Sun 17-Jul-16 22:18:08

Check with your lender , but you don't usually have to wait for your deal to finish in December .You can Just borrow against the property and it's like a separate loan with a rate that you agree at the time of application

The funds are released once they have done all there checks and you've signed etc usually anywhere from 14 days to 30 days

The you have the freedom to pay the builders when you need

Hope that's helps X

Flumpnugget Sun 17-Jul-16 22:20:42

Also, not sure who you bank with, but Natwest have been nothing short of brilliant with us and our borrowing as we went through 2 different extensions on the same property.

united4ever Sun 17-Jul-16 22:23:28

Thanks, I see, we are with Natwest so good to hear that flump. Lantern, are those rates usually as low as mortgage rates (2-3% ish) or are they more like personal loan rates which I know are higher.

lanternlady Sun 17-Jul-16 22:32:32

They will be mortgages rates , as you are borrowing against your property . Rates always tend to be cheaper than personal loans when they are secured against something .
Have a chat with your lender , they are usually great and can give you quotes for the amount you are thinking of and then you can take it from there smile

namechangedtoday15 Sun 17-Jul-16 22:53:51

We've just been through this.

We approached it like this - like you, we used quite a basic formula (knowing what space we would probably create) and had a brief chat with the lender (and played with the online calculators as to how much we could borrow) to see if we were likely to be able to afford it. When I was confident that we could, we had all the plans drawn up and got planning permission. We then got various quotes (in our case, we scaled back plans slightly because it was more expensive than we thought it would be and applied for an "amendment" to the planning permission - to make it slightly smaller) which was agreed). New quotes and then applied for the money!

A couple of things to remember - you can only borrow against the current value of your house if you want money in advance of the works being complete - so that may affect how you borrow.

If you are using a different valuation for your current house than when your house was last valued, then you'll probably have to have it revalued - and you need to do that before you start any work (so to eliminate the risk of a valuer coming out when you have half a kitchen (like us!)).

Depending on your lender, you can borrow more without needing to wait for a remortgage (this is the route we have gone down) - the rate is higher for the extra than our mortgage rate, but much lower than a personal loan rate. We have chosen to take the extra on the standard variable rate (which is still quite low) because we are 1 year into a 2 year fixed deal and we will remortgage all of it (the mortgage and the extra) once the house is finished and the bank will take into account the new value of the house - we'll get a much better LTV.

You will normally get it all through before you start building - I wouldn't like the risk of starting the build without knowing I could pay the builder.

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