Taking money out of mortgage for extension

[violetcuriosity]

Currently on 5 year fixed rate at 1% which finishes in October 2025.

Need an extension built which is going to cost roughly £30k (cheaper than moving).

Originally thought I should wait until I remortgage in 2025 but it's just occurred to me it might make more sense to pull the money out of the equity now? Would I pay it off at 1% for 2 years and then at the higher rate when I remortgage?

Thanks

Are you talking about remortgaging or equity release? It's unclear.

Do you mean increase your mortgage?

In any case, that's a very inexpensive extension. Are you sure of the budget?

Couple of things you'll be lucky to get an extension even a small one for 30 grand
Also you'd be getting a further advance on a different product and the rate won't be anywhere near 1%. More like 6%

As pp has said, it won’t be on the same rate.

When we borrowed it was given as a second mortgage amount running alongside the existing one, it was higher as our existing one was already a low fixed rate. We were able to fix them at the same rate once both those fixed rates finished, but we still now have the two separate amounts to pay each month.

As a previous poster said, you'll be lucky to get a very small room for 30k. Have you actually had quotes?
If you borrow more money then you'll be paying higher interest rates than your current mortgage. You'll need to factor this into the overall cost.

You additional borrowing will be on a new rate- circ. the current rates on the market currently.
You current rate is only for the current amount of money you are paying back

Don't do anything that risks the 1%. Look at additional borrowing not a remortgage.

We took money out to do home improvements a couple of years ago and it was on a second mortgage at current rates. Which thankfully were lower than the main mortgage. Your 1% mortgage loan is a fixed deal so just that, it's fixed. Additional borrowing will be priced at todays rates so 5-6% most likely

Sorry typed that out while breastfeeding, thanks for the replies.

Yes had quotes- when I said extension, it's actually a small garden room (3x4m) with some minor landscaping in our minute pizza wedge new build garden. Been quoted between £22k-27k.

I have nearly £200k equity in the house so was hoping to take some money out of the equity so I guess that's extra borrowing?

So, from what I understand, if I borrowed say £30k that amount wouldn't be repaid at the current 1% rate and at the current rates?

Thank you.

The 'current' 1% was the market rate when you took out your mortgage. Markets have moved and that loan is fixed. So additional borrowing would be priced at todays (much higher) rates.

We had an offset mortgage, which meant we were able to increase our borrowing on the same terms. You probably need to check with your lender whether you can do that, or whether it will be considered as a different mortgage.

We borrowed to do a kitchen in last house; was treated as a new product and at different rates to the mortgage. Thus, when you remortgage next year they will still treat the new product as it's own and it will have its own end period. Only if you move and payoff the product will it end.
So yes, you have the equity, but it's not like a bank account you can dip into.

Great thanks all, got the answer I needed 👍🏻. I think we will wait until 2025 when hopefully rates will be back on the downward slide.