Extending the mortgage for home improvement

[teaandbiscuitsforme]

Just looking for any advice about our options for raising some money for home improvements!

When we bought our house in 2013: 1 civil servant (£50k salary) and 1 full time teacher (£30k), no children. Bought for £268k, mortgage of £240k.

Current situation: 1 civil servant (52k), 1 SAHM with 2 young children. House is worth about £330-350k (based on current market) and our mortgage is down to £210k. Repayments are easy to make (£1050 a month) and we have no other debt. We also have a BTL which pays for itself.

So the current problem- we want to extend our house rather than move. We've got planning but quotes are coming in far higher than we expected so we're looking at almost £200k. We have £150k of savings but would need to extend the mortgage in order to raise the final £50k - would they even consider it given my current employment position?

I'm intending on doing supply from next spring with a view to having a part time position for September. But we will then also have childcare costs for 2 of about £800 a month, although my DD's 15 hours will kick in next September.

I think with the extension, our house could sell for £450k (so mortgage would be about £260-270k) but we wouldn't make all the money back for a while yet. We wouldn't need to move until after the DC finish school but obviously we're concerned about Brexit and a huge property crash!

So is it worth ringing our mortgage provider, or in the current climate, would it just be a no?

We have a joint income of about £40k, our mortgage each month is £700 and we are overpaying £300 each month. So £1000 in total for the mortgage. Why do people think this is not possible to do? The op does it and we manage to (and have 2 cars and a holiday each year so we aren't massively scrimping on stuff).

I don't know either Maryann! We don't have loads of money but we're certainly not on the breadline! The mortgage used to be £1200, that was fine, it's now £1050 which is great. We only have one car at the moment (new in June) and our holiday is going to be a week in October but we're certainly comfortable.

It's really none of anyone's business how they can afford it - I'm surprised OP has explained it. Apparently they do meet the affordability criteria, but the challenge is finding a reasonable quote. Those prices are very high. Have you asked friends/family/colleagues for recommendations for builders?

We spent £90k on our extension of adding a playroom, moving toilet and having a laundry storage room. The walls were knocked through so now it's a kitchen with pantry, dining room and playroom.

I'd get some more quotes.

Yes Kitty. One of the quotes is from a family friend.

The word from the builders is that there's is so much house building in our town at the moment that they don't need to be competitive for domestic quotes. They've got enough work to go round. Add to that the fact that people are extending rather than moving because of Brexit uncertainty and that building materials are going up, these are the quotes we're getting.

They've basically said they can charge what they want and if it's too much, it's our lookout.

How many more though long? We've had 13 in the space of 14 months. (Granted 2 companies quoted this year and last)

Can you maybe look a bit further afield for a builder if that is the local market? I thought you might say that - the pricing just reflects that they don't need the work obviously.

I didn't expect the OP to explain her finances, I was just pointing out there are other factors at play here which affect a mortgage application.

E.g., If her DHs property has a mortgage on it that further affects the affordability criteria.

I think the key point here is the quotes are way too high for what will be gained, financially, from doing it.

We could Kitty. One of the builders is from 50 miles away but his quote is in the middle of the pack.

It's definitely something to consider though - thank you!

I agree Bear but what do we do? Even if I added the £150-200k to our budget, we still wouldn't get a house that has all the attributes that our current house extended would have. Also, because of our location, our house is very desirable so should always maintain a decent value compared to other locations, even in the case of the whole economy crashing.

Thank you for all the points though, it's all stuff that's swirling around in my head!

Im not sure I understand how, if you added £150/ 200k to your budget, which would be £500/ £550k you couldn't get a house with the attributes yours has yet yours will only increase to £450k with the work.

If it's what you really want to do- Could you do the building work and leave it unfinished until you're back at work?

That would reduce the immediate cost

That price does sound very high and I suspect it builds in a lot of 'fat' for the main contractor.

Who did your architect recommend?

Could you project-manage it yourself?

The other thing you could do is stage the works eg. do the groundworks, then later on the building. You don't have to fit out a bathroom straight away, either. By breaking up the work you could possibly get a better overall price.

I take your point Bear. I think it's probably because ours is a semi (the major compromise we'd have to make) but the ones I'm looking at are detached. Thinking that if we're going to move, we want it to be our only move for a long time.

The property market is crazy here at the moment - like we're in a bubble not attached to the rest of the UK. There's hardly anything for sale around us, anything that comes on is getting snapped up before it's hardly been on the market. Two friends have each sold 2 bedroom houses, advertised for about £200k, gone to sealed bids and had cash buyers swoop in with £240-250k. People are getting gazumped all the time. If we were looking at what we really wanted in our location, it would be at least £600k, but our extension would get us pretty close.

We've just been to see a new build development. 4 bed was £460k, 5 bed Was £520k. But it would be a huge compromise on location and schools!

I am going round in circles with this. Thanks for the suggestion of not fitting it out, we hadn't thought about that. Seems a bit sad though!

It would only be for the short term though; if you get the structure built and weatherproofed for the winter using the money you've got just now then, when you go back to work in the spring, you could remortgage to get the rest done.

If you got a revaluation for your mortgage at that point it would likely be at a higher value as it would be a bigger property so your loan to value would improve and hopefully get you a better rate.

That also has the added benefit of allowing you to really see the shape/ light etc in the extension before you buy fixtures and fittings for it.

Thanks Bear, really useful. We're coming to the conclusion that your suggestion might be the best solution for us at this point.

I do feel like we're being robbed but I don't know where else to go with it. A friend is also getting an extension and her quotes are coming back much higher than her architect predicted as well so I do think it's more a reflection of this area at the moment rather than just us being ripped off.

I do know where you are coming from; we've just spent double what I'd thought on home improvements because all the builders are packed out with work and can charge what they like!

To be honest though, I don't begrudge it and am happy with the outcome.

Good luck with whatever you decide.