How did you pay for an extension?

[bigplanslittlemoney]

We are about to complete on a 3 bed semi in South East. It has a detached garage to the right of it and plenty of space, additionally the back of the house (kitchen) was extended but not up at the top, so we'd want to also extend up there as well as to the side (does anyone know what I need to ask the solicitor in regards to whether the neighbour has ever rejected this idea?)

The cost of this is likely to be 100k (probably more?) but we would NEVER have the cash for this in the short-medium term. Due to where the property is (close to a station 30 mins into London) and the area, house prices should naturally rise and I think that the extension cost would at least be recovered in a sale (likely to add far more value than that though).

So my question is, how do we pay for it? How did you pay for yours? What is your advice with this?
I'm only 24 and have little knowledge on this sort of thing but we have no financial help from parents and no inheritance etc.

We paid for ours with cash but that was after working hard and saving hard. We were late 30's when we built our extension which cost £90k.

We’re going to do one and will need to remortgage. I assumed that was what everyone did?

I wouldn't assume you would get the value of the extension back in this market but it might make it more saleable and will obviously benefit you whilst living there. Save, remortgage or inheritance to fund.

We over payed our mortgage as best we could for a few years to get it down as much as possible. Now we have a quite a lot of equity and are in a better position financially so have remortgaged to get the work done.

We paid cash for ours, but by the time it was done we had lived in the house for 13 years and were both in our late 50s. It was worth the wait though.

Lived in house 5 years - half financed massive extension we've just done through mortgage (based on rising equity and over paying for last 5 years) and from savings.

We've spent around £110k and my husband is in the trade so we've done everything through people we know and at trade prices.

It's a massive undertaking.

If house has a single story rear extension it will have been done under permitted development. To extend again you are very likely to need planning - you'll also need a survey to confirm if the original extension has a foundation capable of supporting a second story.

Hi all,

thanks for your advice. so as stated, cash seems impossible. Say we both saved 1000 a month (impossible with our current salaries but possible in future) it would take 4 years (1.5% interest compound)

We are planning to build on it to sell in about 5 years, it wouldn't be a forever home and we do not have children or plan to yet.

The equity on the house would also take us a while. I was wondering about a second charge mortgage, has anyone done this?

How much was your mortgage for compared to the maximum the bank would lend you?

If you haven't exchanged yet, can you pay a lower deposit and borrow more to free up cash? You seem very keen to do the work quickly. I'd live in it first to see what you really want. Pick any building thread on here - it's hugely stressful and almost always runs over budget, sometimes significantly so. Do you want all that stress straight away knowing you may not even get the return as the market is on a downward turn (and will be for the foreseeable future with Brexit I think). I know the South East London market fairly well.

Why exactly do you want to extend it, out of interest? The market in the SE isn't rising right now, so you might not even get back what you spend on it.

Spending that amount of money and living through all that disruption seems unnecessary if you plan to move in 5 years. a 3 bed semi should be plenty, particularly if you're in your 20's and don't have children.

Due to where the property is (close to a station 30 mins into London) and the area, house prices should naturally rise and I think that the extension cost would at least be recovered in a sale (likely to add far more value than that though).

Given that you've now said you only plan to live in it for 5 years, this statement seems very naive indeed. Many homeowners in London spent years in negative equity in the 90s.

Where I am, the market is growing hugely. It was impossible trying to get a house where we are without it going up in price immensely through bidding wars and we managed to get ours by offering asking straight away and only as we'd already sold to FTB so chain was smaller.

I want to extend because it's quite small at the top. We have no kids but will do one day and we also want to do properties up, make a bit of profit. The thing is, I'd never do it once I have kids, I don't plan on ttc until I'm about 30, so I have 6 years (and plans never work anyway!) that feels like a good amount of time to begin and pay for an extension.

We're entirely maxed out affordability wise right now, but my pay doubles in September (professional qualification) and it would have meant we could borrow quickly does mortgage calc £200k more. So I was wondering when my salary does increase whether a second charge would be a possibility?

Probably not a second mortgage, just increasing your existing one. That’s a huge jump though, are you sure it would be comfortable?

I would say, move in and live in it first. Don't get any deeper in debt for now. If house prices are jumping so much, then just living in it and doing it up is enough for now.

Well done and congratulations.

Also wanted to say, that adding a second story to an already there extension is complicated because the foundations may not be enough. So it might be as expensive than a full two story extension.

Good luck anyway!

AH OK thanks for all your advice. I appreciate it.

BTW, I do not live in London!
It's South East of England and 30 mins away from London.#

@3luckystars thanks :D

If you're struggling to find ways to afford an extension and are sure the property will increase in value due to your location look at other affordable ways to add value e.g. conservatory, new driveway, decking etc. Or look at installers who offer long-term interest free credit. If you're only looking at it from an adding value POV and don't actually need the space for kids or a spare room, don't bother getting caught up in second mortages while you're still so young!

Some good tips here - www.sehbac.com/blog/adding-value-to-your-home/

We're entirely maxed out affordability wise right now

In which case why are you even thinking about an extension right now?

Wait until your salary goes up in a year's time, and when that happens, look at whether you can remortgage to get the cash you need. Interest rates might be higher then, or lower. Affordability criteria may have changed. The local market may have changed. A lot can happen in a year.

One thing sounds certain - right now you cannot afford an extension.

Conservatories don't really add value tbh... many people see them as a liability.

It sounds like just doing up this property, modernising where appropriate, will be enough without anything like that.

@remodelling my salary will go up in 7 months, not a year, by the time we move in it will 5 months time. The reason I am thinking about it now is because it will take AGES - the planning, sorting, applying to council, architects. I want to allocate enough time thinking about it in advance so I don't need to rush ahead. I think I am being smart thinking about, plus IT IS EXCITING

I also think that, regardless of what has been happening in the last few months, banking on a huge property price increase happening in the next 5 years is foolish. £100k is a huge amount to spend, particularly when you will need to borrow the cash.

If you find that you can't afford to move in 5 year's time, would you be happy to stay in this house for another 5 years? Another 10 years?

Also I want to extend, it's part of the reason we chose this one, it's a fantastic investment as we've been told by so many people.
Yes we want to add value but if we do extend and have a nice big home, I may not ever want to move unless we go up North (my partner's dream) or abroad

I’m also in the South East. The least affordable city for property in the UK apparently (yay) and people have lost money by overspending on extension. You see it all the time at the moment unfortunately.

I’m not anti extensions though- I’m about to start one. I just think you need to be really sure you’ll get more that your money back because high property prices don’t make that any easier.

I’m also in a job where salary has had some reasonable jumps on qualification etc. If I’m honest, it’s been a bit of a disappointment each time. I still had a student loan then, so that reduced what I ended up with, plus tax is always more than I calculated (worrying given the qualifications...), pension increases blah blah. So I’d either be brutally realistic about your post qualification income or wait until it starts, as a 100% pay rise can be a bit of a let down when you look at your bank balance.