Remortgage to pay family member for work completed.

[KenJ]

Hi all,

Looking for some advice from any mortgage experts out there please... In summary, we're planning on doing some work to our house comprising of knocking our existing kitchen through to a small room next door, fitting a new kitchen and installing a downstairs shower room. Quote for the complete work is circa £32k.

To finance the work, we're looking at borrowing more money on the mortgage, however our current mortgage isn't due to finish (4 year fixed) until April 2019, just under a year away. Therefore, a family member has kindly said they'll lend us the money to complete the work on the understanding we borrow more when we remortgage next April to pay them back.

I was wondering whether this would be OK from the bank / building societies perspective or whether they'd raise any questions and possibly not lend us the extra money for something already completed? We'd obviously have all the quotes, invoices and building regulation certificates to show the work had been completed to a compliant standard. For info, by the time we'd come to remortgage we'd be looking at a LTV ratio of circa 70%; this includes the additional amount we'd want to borrow.

Any advice appreciated, & do you think it worthwhile me just calling our current lender to get their opinion? Thanks.

[StuTheGrouch]

You can apply for additional borrowing during your current mortgage term. You'll basically end up with a second mortgage account.

[KenJ]

Hi,

Thanks for your reply, you're right and we did consider this. However, the additional borrowing (ie, 2nd mortgage) seemed expensive and based on the LTV ratio when we bought the house rather than what the LTV ratio will be when we remortgage in just under a year. Borrowing from the family member and then paying back at remortgage time seems like the cheaper option....

[Sarnie]

KenJ said:

Hi all,

Looking for some advice from any mortgage experts out there please... In summary, we're planning on doing some work to our house comprising of knocking our existing kitchen through to a small room next door, fitting a new kitchen and installing a downstairs shower room. Quote for the complete work is circa £32k.

To finance the work, we're looking at borrowing more money on the mortgage, however our current mortgage isn't due to finish (4 year fixed) until April 2019, just under a year away. Therefore, a family member has kindly said they'll lend us the money to complete the work on the understanding we borrow more when we remortgage next April to pay them back.

I was wondering whether this would be OK from the bank / building societies perspective or whether they'd raise any questions and possibly not lend us the extra money for something already completed? We'd obviously have all the quotes, invoices and building regulation certificates to show the work had been completed to a compliant standard. For info, by the time we'd come to remortgage we'd be looking at a LTV ratio of circa 70%; this includes the additional amount we'd want to borrow.

Any advice appreciated, & do you think it worthwhile me just calling our current lender to get their opinion? Thanks.

Call the current lender and ask them for a further advance for the money you need.....the current requirement for the funds is for Home Improvements.....if you borrow the money elsewhere and need to remortgage to pay it back, the requirement for the money changes to debt consolidation which a lot of lenders have more restrictive criteria around.....