Remortgaging & borrowing extra for home improvements

[Littlemiss74]

Our fixed rate is coming to an end and we have been looking at new fixed rates with other lenders. We are clearly not getting the best deal from our current lender who we have been with for years so we want to move away from them.

Initial quotes have shown that for either the same or £30 more monthly than we currently pay we could borrow enough to do bathroom, kitchen and three windows that need replacing. Our bathroom does need doing, the kitchen is functional but tatty and not the best layout.

The numbers are saying that we could afford the monthly payments for the extra borrowing as they wouldn't be much different to current and we would vastly improve our house but I can't help feeling nervous about doing it. I suppose because it feels like we've spent the last few years reducing the mortgage and this would obviously mean having a bigger mortgage than what we started with.

Has anyone else done this please? I would appreciate hearing from anyone's experience of doing similar. TIA.

We did this last year.

We too had been with our bank for 6 year before we remortgaged to another lender. At the end of the first fix, we were happy to switch with our lender as their retention rates were unbeatable by the other products our mortgage broker had found. It was quick and easy. They don't do any checks as everything stays the same, just a different interest rate. I doubt we would have passed any affordability checks at this point.

However, at the end of the 2nd fix, our financial position had changed and we wanted to borrow more. Our monthly payments would go up by £150. Our income had dropped by about 3rd due to one of us going part time and we had DC too. Our bank's online affordability calculator showed that we wouldn't meet their affordability criteria so we asked our mortgage adviser to find us another lender whose criteria we passed.

We too did improvements to the house similar to what you are planning to do.

In terms of whether we were comfortable with the extra borrowing, we looked at the hard figures to see if were ok;

With the extra borrowing, our new LTV would be 65%.

Our new monthly mortgage payments were 30% of our monthly take home pay. Slight higher % than we wanted but acceptable. We considered extending the term to bring this figure down to 24% but decided to stick to the original shorter term, on a 2yr fix, and that if it proved to be tight, we only had to do for a short 2 yrs and then we would review our financial position and remortgage with an extended term if required. It is almost a year now and I believe we are managing fine with 30%. We could have more savings though, but then rates are so poor that any extra paid towards the mortgage is lowering the principal and eventual interest.

I have just done this - 60% increase my mortgage as bought ex husband out and borrowed for work on house. Lengthens term but payment stays the same.

Thank you for your replies. We're still mulling over what to do. It is tempting to borrow the extra as it would hardly change our current monthly amount and it would improve and therefore add value to the house.

I'm reviewing all our finances at the moment. Neither of us have huge amounts in our pension pots so DH feels we should invest in the house so that we could always downsize if necessary for retirement. But I'm thinking if we've spent money making it a lovely family home I won't want to ever move! Clearly he is more practical and I am more emotional about it!

It's hard to know what to do.

Notyetthere now you have gone ahead and done your home improvements are you happy with your decision to borrow more? I just can't see any other way that we could ever afford to do these improvements as to save for them would take us years and years.

We’ve just released as much equity as possible to do some major home renovations. We’ve outgrown the house and it’s doing this or move. Hopefully it will increase the value of the house significantly and we’ll remortgage again when the work is finished.

MrsFotheringill so have you remortgaged to release the equity? Sorry if I'm being stupid but why would you then remortgage after the work is done?

Yes we’ve released equity to fund the building work, we’re also borrowing some from a family member (it’s a major renovation!). When the work is finished we’ll remortgage again to repay the family member and fix mortgage for a longer period with a better loan to value ratio.

Ok I see what you mean thank you.

@Littlemiss74 Yes we are happy with the home improvements.

We have a lovely new insulated roof over our conservatory which has warmed up the space and now we use it all year round.

We also repaved our drive; fits 3 cars now and not the massive potholed puddle ridden weed infected mess it was.

We replaced all the windows to the house with triple glazed ones.

We cut down one of the trees that cast shade over our whole garden all day. This was the most life changing; we enjoyed the sunny garden last summer but also on sunny wintery days we have love it as it wasnt as muddy as before where the grass didn't grow under the tree.