Additional mortgage borrowing for extension

[Nemophilist]

I’m wondering if anyone has any experience of taking out additional borrowing with their existing mortgage lender for an extension

We have had quotes and have decided with a contractor for work and have enough money in savings to get it moving initially

The work is due to start early next year.

I spoke to the mortgage company last night to ask about additional borrowing and explained I don’t want a chunk of money in the bank too early and be paying the increased monthly until next year.

They explained that the additional borrowing can be in the account usually within 24 hours and I can apply January or February to suit timeframe

However, I am nervous about giving the go ahead on the work without having an agreement from the mortgage company.

On paper we are well within affordability and LTV will be less than 70% on current value but what if there is some random reason they decide not to lend it to us?

What is the normal thing to do in this situation?

Thanks

[DaveH23]

Could you not get the money early and max out an ISA and let it work for you until you need it?

Assuming you haven't already maxed an ISA for the current tax year of course.

[BoRED S2upid]

DaveH23 said:

Could you not get the money early and max out an ISA and let it work for you until you need it?

Assuming you haven't already maxed an ISA for the current tax year of course.

Don’t even need to use a cash isa for short term banks will give you 4%.

[gangzoom]

Roughly 50% of our renovation costs were funded by additional borrowing. The bulk of the borrowing was secured about 10 months before the build started because the interest rates were so low (1.4% fixed for 10 years), we put the money into premium bonds and drew down as needed. We ended up taking up another small amount of borrowing as we didn’t want to end up too tight with cash as the build progressed to finishing and we didn’t want compromise on spec.

We were prepared to show the mortgage company drawing, valuations etc, but they weren’t interested, they asked me how much value I thought the renovations would add, and took my word for it, this meant we kept our LTV below 60% even with additional borrowing which might be why the mortgage company seemed so relaxed.

[Nemophilist]

gangzoom said:

Roughly 50% of our renovation costs were funded by additional borrowing. The bulk of the borrowing was secured about 10 months before the build started because the interest rates were so low (1.4% fixed for 10 years), we put the money into premium bonds and drew down as needed. We ended up taking up another small amount of borrowing as we didn’t want to end up too tight with cash as the build progressed to finishing and we didn’t want compromise on spec.

We were prepared to show the mortgage company drawing, valuations etc, but they weren’t interested, they asked me how much value I thought the renovations would add, and took my word for it, this meant we kept our LTV below 60% even with additional borrowing which might be why the mortgage company seemed so relaxed.

This sounds ideal.

I had mentioned to the mortgage company about the increased value the work would add but they didn’t suggest any option of using that value until work was completed and a new valuation be carried out at remortgage point

Maybe it’s worth me making an in person appointment

[Sarnie]

Nemophilist said:

gangzoom said:

Roughly 50% of our renovation costs were funded by additional borrowing. The bulk of the borrowing was secured about 10 months before the build started because the interest rates were so low (1.4% fixed for 10 years), we put the money into premium bonds and drew down as needed. We ended up taking up another small amount of borrowing as we didn’t want to end up too tight with cash as the build progressed to finishing and we didn’t want compromise on spec.

We were prepared to show the mortgage company drawing, valuations etc, but they weren’t interested, they asked me how much value I thought the renovations would add, and took my word for it, this meant we kept our LTV below 60% even with additional borrowing which might be why the mortgage company seemed so relaxed.

This sounds ideal.

I had mentioned to the mortgage company about the increased value the work would add but they didn’t suggest any option of using that value until work was completed and a new valuation be carried out at remortgage point

Maybe it’s worth me making an in person appointment

An in person appointment won't help you any more. Most have got rid of the in branch mortgage advisors, so you'll only be talking to a cashier type.

[gangzoom]

Sarnie said:

An in person appointment won't help you any more. Most have got rid of the in branch mortgage advisors, so you'll only be talking to a cashier type.

Barclays did everything via phone for us, and than documents all signed electronically. But it was pretty clear the person at the end of the phone was basically feeding a risk profile algorithm, so its the algorithm said NO, or YES but do site visits ect. I suspect because we had a regular history of overpayment, property prices in the area going up anyways and relative low starting LTV their system put us down as very low risk, therefore no real need for any additional assurance.

[otolith]

BoRED S2upid said:

Don’t even need to use a cash isa for short term banks will give you 4%.

On which you will then pay tax at your marginal rate.

[Sarnie]

gangzoom said:

Sarnie said:

An in person appointment won't help you any more. Most have got rid of the in branch mortgage advisors, so you'll only be talking to a cashier type.

Barclays did everything via phone for us, and than documents all signed electronically. But it was pretty clear the person at the end of the phone was basically feeding a risk profile algorithm, so its the algorithm said NO, or YES but do site visits ect. I suspect because we had a regular history of overpayment, property prices in the area going up anyways and relative low starting LTV their system put us down as very low risk, therefore no real need for any additional assurance.

Which is what I said, no point going for an in person appointment

[MattS5]

Why not just get the decision in principle/agreed, get all the lending sorted, and then you have 6 months to actually sign the paperwork anyway.
You'll not be paying any payments until you draw the loan.

But you'll have the peace of mind you're looking for.

[Nemophilist]

MattS5 said:

Why not just get the decision in principle/agreed, get all the lending sorted, and then you have 6 months to actually sign the paperwork anyway.
You'll not be paying any payments until you draw the loan.

But you'll have the peace of mind you're looking for.

This was an idea I had too but Halifax say they’ll only allow agreement in principle to be valid for 90 days which is still a bit early.

Then again, it’s not hugely early so I guess wait a month and put it through.

[MattS5]

Nemophilist said:

This was an idea I had too but Halifax say they’ll only allow agreement in principle to be valid for 90 days which is still a bit early.

Then again, it’s not hugely early so I guess wait a month and put it through.

Ah, I think you need to progress past the agreement in principle, get the application agreed and sorted, then you'll have 6 months (I think) to sign the final docs that trigger the actual payment.
Just checked - It's the mortgage offer you want. (once I had that, I then had 6 months to draw the cash with Barclays)

Edited by MattS5 on Friday 13th September 16:07

[Nemophilist]

MattS5 said:

Ah, I think you need to progress past the agreement in principle, get the application agreed and sorted, then you'll have 6 months (I think) to sign the final docs that trigger the actual payment.
Just checked - It's the mortgage offer you want. (once I had that, I then had 6 months to draw the cash with Barclays)

Edited by MattS5 on Friday 13th September 16:07

Thanks Matt. Hopefully this is the same for Halifax but they didn’t seem to think so when I spoke to someone there on Wednesday

Is it worth speaking to my mortgage advisor even though the borrowing will need to be through my existing lender?

[MattS5]

Nemophilist said:

Thanks Matt. Hopefully this is the same for Halifax but they didn’t seem to think so when I spoke to someone there on Wednesday

Is it worth speaking to my mortgage advisor even though the borrowing will need to be through my existing lender?

I guess thats up to you. I just did mine thru my existing lender as the rate was just as good as what I could see through aggregators.
Took about 30 mins to get the thing all sorted.