Additional borrowing and cost extending

[Pammela]

Hi, we’re looking to do a loft conversion in a bungalow and wa tend out on top of a single story extension. It’s a big job- the roof needs to be re angled, so that will all be replaced.

We then also want to knock down a wall and reconfigure the back of downstairs to an open plan.

This will cost a fair bit- we luckily won’t need foundations, but aware things are pricey atm.

A couple of questions- has anyone done anything similar recently and could you give me a ball park on cost.

Also, we would probably need to borrow to do this. What are rates like and do you take this for the same length as mortgage or can you have a different term?

We’re in Scotland. Thanks!

Does the existing single storey extension already have foundations as deep as needed for two storeys? If it's recent it may, but older extensions may well not. The back reconfiguration sounds as though it would need supporting steels?

If you have drawings already you'll need calculations from a structural engineer. Architects often underestimate actual building costs and prices for building work and supplied have skyrocketed over the last two years.

Has anyone else locally done similar work recently? You might be able to ask them about their costings. Hard to gauge without square meterage, size of steels, extent of roof work and knowledge of prices in your local area.

Yes, we’d probably need steels. We’ve had a huge variation in what work would cost according to architects- from 100k-300k. We’re unsure about the foundations but have discussed reinforcement costs etc, if required. We’d rather not do that but it doesn’t sound as though it would put us off.

I know someone who has recently completed a house renovation with extension upstairs and 2 extensions on the ground. Re-wiring/windows etc. this was about 300-350k for everything. But we don’t need this amount of work.

We live in an expensive area so the higher end of cost would still be returned immediately.

Still just wondering how people manage their additional borrowing- is it treated the fact same as the mortgage?

Just had a loft conversion in a bungalow, 2 dormers for 3 beds and wet room upstairs and reconfigured smaller rooms downstairs, including removing chimney wall and a steel RSJ. No building over extensions though. Whole lot was just shy of 100k. So I’d guess a bit more than that, presuming no foundations. Also in an expensive area.

Oh thanks! Did you get a new kitchen with this?

I think we’ll probably be able to do it for 150k but the kitchen would be on top of this. It’s doable, but worrying with the price of building and obviously higher interest rates just now.

Did you stay in the house when you had it down or move out for a while?

You basically have 3 options with the money. You can either remortgage with your current provider (on their current terms) and take out equity, you can remortgage with a different provider and take out cash equity, or you can take out a second mortgage with your existing provider which would have different terms to your current mortgage. If it sounds confusing, that’s because it is! Definitely worth your time speaking to a broker.

In terms of costs, this depends on a bunch of stuff including your equity, income, access to preferential rates etc but you’d be safe expecting rates to be about 5%. A £200k additional mortgage for 25 years would cost you £1,169 extra a month.

Have you got sufficient equity in the house now based on its current value? We remortgaged initially (we had come to the end of the fixed rate period) so remortgaged to take put some equity. Obviously the bank will only lend on the value of the house pre works. We then did the build and took out "additional borrowing" to finish a few things off (didn't remortgage as we were still in a fixed rate period), it sits as a second mortgage with the same lender. When the house was revalued for that additional borrowing it was done of the basis of the house + works, so much higher value. It's for a slightly different term (so both mortgages finish around the same time) but the fixed rates are different and the fixed rate periods end at different times. It's awkward as we'll probably have to pay an early repayment charge on the additional borrowing if we want to remortgage the whole lot in due course but it's not a massive amount so it'll be hundreds rather than thousands.

We completed a loft conversion in 2021 on a bungalow. 35sqm for about £80,000. South east.

With regards to mortgage, we have 3 mortgages going at the same time at the moment. 1st is the original amount. 2nd is the extra we borrowed to move to the more expensive house. 3rd is the amount we borrowed to complete the loft conversion a couple of years after we moved in. All with the same bank.

As long as there is equity in your home that you can draw on and that you pass affordability then you can go for it. I remember our bank had a limit of about 4.5 and 4.85 times salary as a benchmark. No matter how much equity you had, that was the maximum they could lend. This would also be affected by other debt that you might have.

Looks like you are doing more than we did as we were able to stay here whilst work was being completed in the loft. Disruption was minimal and worst during the break through for stairs.

Ok, thanks. We have about 250k equity atm and could borrow about 500k based on 4.5x salary. Which is actually a bit more than the value of the house atm. So it seems doable. It’s just a bit scary!

My neighbours recently finished something very similar to your idea. Initially the budget costing came in at a little under 250k for everything finished including new kitchen, complete new heating system including under floor heating and a little external landscaping at the back to give them a nice patio area. They have now finished the structural work and the results are tremendous - it's a completely different property. However the cost has been eye watering. So far they are up to 320k spent and the landscaping is still to be done. They just had the property revalued and have only added around 260k to the value so are a bit gutted. Having said that they don't plan to sell and are really pleased with the result. With regard to finance they sold thier BTL flat to fund the majority I think.

Sorry if I'm telling you what you already know, but you'll only be able to take out some of that equity though (say to 90% of the property's current value) - regardless of your salaries. If the works are going to cost upto £300k, you may have to borrow in stages. The difficulty with that is that the increase in value that is added by the works might not align with when you need additional funds to keep the works going, if you see what I mean.

Yes, I realise this. We wouldn’t spend 250k tbh- I think we’d look to keep it to around 150k which we’ve been told would be doable.

We would hope to use some savings/bonus too, then maybe use some equity, then look to do additional borrowing rather than just using all of the equity. So we’d perhaps only look to take out about 100k of extra funds.

Sounds like we’d have to talk to a broker about the most viable option. We would definitely get all of the money back in value. Houses with what we want to do sell for around 750k, we bought for 380k. So, we’re fairly comfortable doing the work but we don’t want to spend a crazy amount.

OP, how can anyone possibly say without knowing the size of the space? People are just guessing numbers. How big is loft.

Have you already paid for an architect? A good chartered surveyor or structural engineer can do both the design and calcs, usually for a lot cheaper and with a more efficient design (fewer steel beams etc).

Would you have to know exactly where you want things if you did this or do they give you suggestions?

No, they would design it. If you had an idea, they would likely improve it.

@Pammela We did the downstairs and steel first so only had to move out for that period, about 10 days. We didn’t have a new kitchen as it’s fairly new but did redo the downstairs bathroom during that time too.

The upstairs work was not too disruptive on the downstairs apart from we lost a bedroom for the staircase, but we had 3 bedrooms downstairs so that was ok.