Remortgage/extension how?

[StraffeHendrik]

I feel I should be able to find the answer to this online, but somehow have failed so I thought somemone on here must have had the same question and solved it:

We will be wanting to extend our house at some point in the next three years or so, but not yet, and we can't yet set a date (could still need to move temporariliy or permanently for work, not sure if having more DC, etc etc).

Our 5-year mortgage deal comes to an end in November. How does this work, if we get another 5-year deal do we have to sort out the additional borrowing for the potential extension up front ,or might we be able to add it later (and do we have to get some kind of pre-agreement for that?) - or would we be unable to extend til the 5 year deal is over? If the latter I guess we could go for a 2 year deal but we might still not be ready after the two years.

For context I think we are looking at over £100k extension cost (small house needs big extension) so it will need to go on the mortgage not another form of finance. I don't think this will be a big stretch with respect to our incomes, the value of the house or anything like that, we are still living in a small house we bought when we had lower incomes and no kids, but the location is good and we have space to extend.

Thanks

This was years ago, but when I borrowed to get central heating & other internal works done it was like a second loan running alongside, so a single payment as same bank, but the loans had different lengths and interest rates.

I guess I could have had them both finishing at the same time, but I knew I was selling up within a couple of years so just went for 25 years (had about 10 years left on main borrowing).

If you take another 5 year deal, and you want to borrow the money mid deal, it will be regarded as additional borrowing. If you renegotiate a mortgage deal when your current or future deal runs out then it's a new (increased) mortgage. The latter is easier to get provided you aren't mortgaged to the hilt.

See if you can "borrow more" with your lender - there are various ways that lenders offer this, but it usually sits along side your existing mortgage if the timings don't work. The only downside (in our case anyway) is that was at a slightly higher rate than the original mortgage because we didn't take it out for a fixed period (so that we could pay off /remortgage the original mortgage and the additional borrowing when the fixed period for the mortgage expired).

The only caveat is that for a big extension, you need sufficient equity based on the existing value of the house, or you need to borrow more in stages. The lender will only use the value of your small house to calculate the LTV / ability to borrow more at the start.

Thanks! So if we are considering another 5 year we should find out if they offer the ability to borrow more as part of choosing a deal I guess

Hopefully LTV should still be under 75% of the current house as prices have gone up a lot over 10 years and we have repaid some or the loan also

Apologies if this isn't you, but I've recently encountered several people who thought when your fixed deal ends, you have to go onto a new deal. You actually don't need to do anything and you'll just move onto the standard variable rate. The standard rate on mine is less than my fixed rate so I'm going to leave mine for a while when the deal expires in a few months as like you I want to remortgage for a higher amount but don't want to do that quite yet

Thanks pineapple, I had assumed that would be expensive (just checked and in our case it is not great)