Funding arrangement for house extension!

[Zakh]

Hi

We desparately need to do a double house extension and loft which will cost about 120000. We were planning to have money from bank when we will remortgage the house next year. We bought the house for 195000, have mortgage of 145000 left. The current house price is 240000.
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When we bought the house we had one income. Now we are having 2 incomes and earning double than what we were earning at the time of having mortgage.

Can anyone advise whether it's doable or what will be the best way around for funding the extension?

Hmmm I don't think it's doable by remortgaging. You only have 95,000 equity in the house and you'll need to leave some in.

Can you do it in stages? So borrow some to get the loft done and then in a couple of years remortgage again against the increased value to get more out?

Or you can take out what you can now and find alternative borrowing for the rest and then remortgage again when it's done to pay off the additional loan.

We've had to borrow from a number of sources. We kept money back when we bought, took out a loan, borrowed from family, and now we're going to remortgage against the final value of the house now the work is done to consolidate and pay all the additional borrowing back.

Talk to a mortgage broker about what you can afford on your salaries and looking at your credit rating

Assuming you can get 90% mortgage, that means your new mortgage would be £216k and you would get £71k cash after paying off the old mortgage

How much savings do you have? Is £71k enough from the remortgage?

Also, does the £120k estimate for building work include a large contingency? If not then you need to add this on

We thought similar, we bought for £197k (worst house on the street) spent £40k on it and hoped to remortgage to release £40k for an extension.
The bank would only value it at £210k!!! We appealed and they sent out a surveyor who valued it at £220k so we drew down what we could. The house was worth £260k at the time and we had an estate agent value it and a similar house sold for £260k but they wouldn’t budge “because we only paid £197k”.
We’ve done the work (over a longer period) and house is now worth £360-380k, 2 similar houses on our street sold last year for over £400k so this is a conservative estimate. When we remortgaged last month they valued it at £279k! It doesn’t matter too much because at this level we can still get the 60% LTV mortgage but I have learned the hard way that banks are very conservative with their valuations - especially if you want to draw further funds.

@NorthernDuck oh you've got me worried now! But a good reality check

We needed to remortgage for an extension last year, and found the actual bank valuation was significantly less than the paper valuation they used to calculate mortgage deals without extra borrowing- by about 60K in our case which was the difference between releasing 120K and 100k in the end. The maximum we were allowed to remortgage to was 80% LTV iirc. I'm so glad we went ahead though (had some ISAs we used to make up the difference) as we couldn't have afforded the same extension this year, prices have gone up by about 20% as well here.

Thanks for your messages. Beggingforsleep I think the way tou saying looks more doable that have it done in stages.

Basememtideas 120000 was estimate. Thanks for mentioning mortgage broker. I will contact one to have further reality check.

NorthernDuck thanks for sharing your experience and information.

Itsalwayscycling, glad to know that things worked well for you.

Once again thanks for your time.