How does remortgaging for an extension work?

[MaryPoppinsPenguins]

We are going to extend our house next summer, and it should cost around £100-140k.

We will only have 90-100k in savings and I’m hoping we can remortgage for the rest, but haven’t lived here that long.

Do you need a certain LTV at the time or do they take into account what your house will be worth after works are completed? (Proof from planning permission / builders quotes etc?)

Thanks in advance for any advice... I’m getting so confused by google!

I just remortgaged. They looked at what the house is worth now. They sent a surveyor round to do the valuation, which surprised me!

We had to send in bank statements/proof of income etc. We were only borrowing £15k. It was quite an arduous process.

Oh really? Did they care what you were remortgaging for?

The remortgage usually is based on current value of the property and yes LTV will be considered. Some banks have a minimum LTV of 15% after the extra borrowing.

Yes, they asked what we wanted the money for. It has to be 'home improvements'.

Loveka is right. I remember we wanted to replace our conservatory roof as part of a refurb and when I mentioned it to the roof company that we intend to remortgage to fund the work he said he sent us a copy of the quote to show the bank.

Yes, but everything will be done on basis of current value.

So say value of house is now £400k and mortgage is £300k. Your LTV is 75%. If you want to borrow another £40k then your LTV will be 85%. Your interest rate is likely to be higher.

When the works complete, you remortgage again (so suggest a 2yr fixed deal). Say value goes up to £600k (ignoring the amount you pay down over the 2 years) your mortgage is £340k so your LTV drops down again (to just over 56% on that example).

All I would say is make sure you borrow enough (we ended up having to go back again to borrow more which delayed things) and be confident that the work you're doing is likely to add value over what you're spending.

Thanks :)

What namechange said and find a decent mortgage broker as well, better rates than going direct to your lender and take away much of the arduous process on your behalf.

I think a broker is no help unless you are doung a complete remortgage wigh a different lender.

In this case you are approaching a current lender and asking to increase the borrowing.