Financing an extension, what order?

[Zarara]

We’re in the very early stages of planning an extension. We will need planning permission for what we want and we don’t know how much it will cost. It will be a single storey side and rear extension with a new kitchen utility, bathroom and spare bedroom/snug.

We would like to get an architect to help us utilise the space and to get all the building control drawings etc. We will probably fund it by savings and a remortgage. Question is do we get the planning first then look to see what we can borrow or do we speak to our mortgage company and see what they would lend us? If you do remortgage to release equity how does it work and how long does it take? When you started talking to builders did you tell them your budget or did they just quote? I don’t really know where to start

Won't the mortgage company need to know what the increase in value of the house is after you've done the extension? I think most people do it from savings or credit and then remortgage afterwards to convert any expensive loans into a cheaper mortgage.

The architect will be able to give you a guide price but they can be not very realistic (ie don't know the price of steel or bricks). The builder should be able to give you quoted based on plans - it's often the fittings and fixtures that have to give when your budget cuts in so I'd suggest you decide on what your absolutely must haves are. Depending on where you are, trades are £150-200 a day, good builders should be booked up 6 months in advance, and I'm our area £1750-2000+VAT is the price per m2

Find out from the mortgage company first...and yes if you are high loan to value you will need to check as well

As for prices...architects will give you an extremely rough idea and from experience (2 extensions now) they were miles out, and always miles under. I would budget on quotes being 30% higher than they suggest and when you engage a builder have a contingency of 20% but make sure your contract is underpinned with a very tight specification

Even with a good builder suggest you order the diazapan 😆

We had an idea in our head what we would be comfortable extending our mortgage to. We also had some savings. Got an agreement in principle with bank, got architect out, then submittted plans (permitted development so fairly straightforward). Whilst application going through we got builders in for quotes. I think we had a realistic idea how much it would cost which helped at the outset.

We got a builder over to discuss what we wanted, he gave us a rough price. We then requested that extra on our mortgage, no issue with prospective increases in value. LTV wasn't impacted greatly as it had increased in value by £50k since we bought it and we borrowed £65k. As soon as it was approved we got the drawings done. However ours is a simple box on the back, anymore complicated and I'd probably have gotten plans first

Thanks, so it looks like I need to get some plans done first and then contact the mortgage company after. I’m hoping that we’ve got enough equity to cover the cost. From what I’ve read if I estimate 2500 per sqm then it should give us a rough estimate as we live in the SE and need a kitchen, utility etc

We contacted our bank after meeting with a couple of builders and the architect. We had a good level of equity and the work will add more value so it was an easy sell to the bank. They initially said they might have wanted to get the planning permission before approving the loan but in the end it was approved solely on the builder quote. It all happened really fast and now we have moved into the planning stage with the knowledge that the money is already in our savings account which is great. I would definitely suggest speaking to your bank to see what their process is.

We got a builder round first for ball park figures as we are having a fairly straightforward extension. Then spoke with a broker who sorted out remortgage out and have financed the entire thing with the remortgage money. Our builder said (all three did that we got quotes from) that we didn't need an architect just structural plans but we decided to get an architect anyway as we couldn't decide on layout.

I would contact your mortgage company or a mortgage adviser first to get a ballpark of what you can release or borrow. You don't have to actually do anything but you'll have a better idea of what you can afford. You can then work with your architect with a budget in mind as they will need to know roughly what you want to spend, it would be a waste of time working on something completely out of your reach.
Then get planning permission. Our builders wouldn't even look at the project until we had planning. When they do come to quote, don't tell them your budget - they'll just work to it, why wouldn't they!!?. Once you have first round quotes you can then start working with them to get the quotes down if they are over budget etc. And be very clear what the quote needs to include. eg we were very clear that the quote needed to included budget for a kitchen, all flooring and decoration.
A remortgage should not take more than a few weeks - but remember, you don't need all the cash in the bank when you start the building work as you should never pay any builder up front. Your savings may be enough to pay the first instalment (after initial stages are complete), whilst your remortgage completes to pay the other instalments as you go on and the final settlement after snagging. We started our project in Nov, paid first instalment in Dec with savings and our remortgage funds were in the bank end of Jan.

Oh and remember that all costs are likely to exclude VAT@20%, and I agree with PP that the architect will be 25-30% under the builder quotes!!
AND, you will need 20% contingency - don't believe you can do it without, you won't - and if you do, you'll use the rest of the money on fancy extras or new furniture, as you realise anything you previously has doesn't fit or suit the new space!!

Thanks Paz that’s really useful

@didireallysaythat

That is excellent advice!