Clueless about best way to afford extension - Help!

[PinkyU]

We’re feeling pretty cramped currently in a 3 bed end terrace (2 adults, 18yo dd, 9yo dd and 6yo dd) we have a reasonable amount of space to extend to the side to create an extra room down stairs, larger kitchen and an extra bedroom upstairs and bigger bathroom (potentially a small en suit for us).

We had always planned on extending eventually but after the birth of our youngest and subsequent diagnosis of multiple medical conditions and disabilities, I’m now no longer working and so finances are vastly different now.

Regardless of this, we still need more space, even more so now and youngest dd and middle are sharing a room which results in horrendous broken sleep and disruption for the entire household.

So, we put down £30k deposit on a £117k house resulting in a 25 year mortgage of 77k. It’s 10 years later and we’ve over paid, leaving us with around £30k(ish) left. The house is now worth around £130k. So we have a fair amount of equity now.

Is it possible to access this equity without increasing our repayments and instead increasing the time left remaining on the mortgage so we can continue to pay a similar amount to what we do now? Or is there another/better way of doing it?

I feel really stupid and embarrassed for not knowing this stuff tbh.

(Moving isn’t an option for us due to youngest dd’s needs)

I believe you can remortgage over a longer term after releasing equity, this may make your payments increase though. I would speak with a mortgage advisor, plenty are free if you google and they’ll help you get the best deal :)

Yep, you can increase the term to keep your payments down. The only issue being your age and how long the term would be. Mortgage companies won't be as happy extending the term if it takes you well in to retirement age.

Thank you both, very helpful ideas. Speaking to an advisor I think would be the best bet, I’d been put off doing that as I’d heard that due to regulations they don’t have to tell you of all options open to you, but nothing ventured and all that.

We’re both in our mid thirties so hopefully that wouldn’t be a factor.

We just increased our mortgage by almost £40k and reduced the term and our repayments only went up by £10 a month... but this is because we had a really bad interest rate at first (due to an old mobile bill default which is now gone from DH’s credit file). So there may be some leeway there if you weren’t on a good deal?

The problem is usually whether you’ll be able to borrow more now your income is down, but as you owe so little on the house you should be able to remortgage for quite a bit even on one wage. Do you receive things like tax credits or disability benefits? Nationwide took this into account for us which helped with affordability.

That’s really good to know sinkgirl, we’re on a 3 year fixed rate currently which is around 5%, I think if we continually shopped around and changed regularly we could really improve that (not even sure if it works that way embarrassingly).

We do now receive tax credits and DLA for our lo so that might be helpful if that can also be taken into consideration as income.

If your current rate is 5% you can definitely do better. This would reduce your payments with nothing changing.

Then yes, either extend the term or not as required. Take out more than you think you need to cover inevitable overspend. You can always overpay it back in later. And yes, see a broker for a good deal.

And visit mse to understand the impact your mortgage interest rate and your overpayments have. It makes a massive difference and is really worth understanding, honestly if you find things financially stretching this can have a huge impact.

Try this calculator to work out repayments.

www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

You may need to have your finances reassessed, depends on how much your DP earns.

The calculator will give you a rough idea on what they will lend.