Worried about remortgaging to do building work in the current economic climate

[Cinnabunbun]

Are people feeling more risk averse in the current economic climate? We are keen to do a big 2 story extension plus loft conversion on our house. It would mean a significant increase in our mortgage payments which we can meet at the moment just about. It would give us a potential future income with space for a lodger. But we'd go from having a good chunk of equity in the property to about 50% at today's house prices. What is the worst that can happen?

A couple of friends I've mentioned it to have said "aren't you worried about brexit?" type things. We are in the London bubble so all the ££numbers feel pretty bonkers and we are hopefully never moving. Is now the time to take on extra borrowing?

Plus I just read this:
www.google.co.uk/amp/s/metro.co.uk/2018/09/14/will-house-prices-drop-after-brexit-7944121/amp/

We are planning work, also in london - DH is worried about prices going down but we are also not planning on moving any time soon

It’s one of those risks - unfortunately seemed a good idea at the time to buy to then renovate

50% LTV after doing the work is good. It leaves you with a fair amount of equity before you drop into the more worrisome 95% LTV territory.

We are planning on doing work but not as much as you are doing. Like Pitter we are not planning on moving anytime soon.

If you're planning on living there indefinitely/ forever then I wouldn't be too worried about equity/ house prices. 50% is still a decent chunk.

I'd be more concerned about only being "just about" able to meet the mortgage payments (and are you confident you will actually be able to get a mortgage if it's so tight, given that lenders stress test against a much higher rate of interest than the one you will be on initially).

If your jobs are very secure and you have scope to reduce non essential outgoings then it might be less of a problem. If your jobs could be affected by Brexit (or anything else), and you really have no scope to reduce your outgoings, then I would have serious second thoughts.

Wouldn't worry me, especially as we have plenty of equity. We are planning a loft conversion for the Spring.

Only thing I'd do is fix my mortgage.

The worrying thing for me is doing work to have space for a lodger. If you don't need the space for you / your family, why are you doing this?

The income from the lodger would be paying towards the mortgage increase which is what makes it more affordable for us. We definitely have scope for reducing our outgoings.

A friend suggested putting the work off in the hope that there was another market dip which would make builders, architect etc more affordable as potentially less building work going on.

A friend suggested putting the work off in the hope that there was another market dip which would make builders, architect etc more affordable as potentially less building work going on.

But the price of materials might go up if inflation rises post Brexit.

I'd be a bit concerned by them repayments being just about affordable. Sounds tight. Would having the extension and not the loft conversion be a compromise?

What happens if you can't find a lodger once you've had the work done, or there's a gap between lodger when you're paying the whole increased mortgage yourselves? Or you find having a lodger is really uncomfortable?

If it works for you timing wise and you have buffers in place to cover redundancy etc I would go ahead. 50% sounds fine to me especially as you aren't planning to move. The mortgage payments would be a concern but if you are sure could get a lodger then should be OK.

I am nervous about it but we bought a second home without selling the first because that worked for us re secondary school places but we have no mortgage on first and 30% mortgage on second which as rural is low value. Couldn't wait a few years due to age of kids, if waited would have been looking moving once GCSEs started and very probably needing to pay private fees to get places near.