Remortgaging during building work

[edthedead]

Can anyone tell me if remortgaging during building works is likely to cause issues. Our current deal end fairly soon and we are just about to start building an extention which will involve opening up the back of the house and take 5-6 months. Are the lender going to be unwilling to lend during the works?

[RowanF]

Hi Ed,

Tricky question, because firstly you can remain with your existing lender and they won't conduct a new physical valuation in almost all cases, and potentially even borrow more if needed without a valuation. Secondly even moving lenders may result in a lender using a drive-by valuation or desktop valuation and would therefore not see the work, this depends on the lender and usually your loan to value bracket.

I would also double check your home insurance as it may be invalidated by the work and not having valid buildings insurance goes against T&Cs of the mortgage.

Oh lastly, what about getting the remortgage application submitted soonish, so the valuation is done and the application at legal work stage when you then commence with the work; slightly risky in case a re-valuation is needed although low risk.

Happy to discuss further, as I am a mortgage broker, as is 'Sarnie' on the forums who may also comment.

[Sarnie]

edthedead said:

Can anyone tell me if remortgaging during building works is likely to cause issues. Our current deal end fairly soon and we are just about to start building an extention which will involve opening up the back of the house and take 5-6 months. Are the lender going to be unwilling to lend during the works?

You've not mentioned whether you will require additional funds as part of your remortgage, to pay for the extension? If so, then a full underwrite would be required, even if staying with the current lender, including a physical valuation. if that happens the lender will only consider the property as it stands when the surveyor visits, not what it may or may not be like when finished.

If you don't need additional funds then a product transfer with the current lender would be advisable or, as Rowan said, staring your full application ASAP before the works start.....

[edthedead]

Thanks for the replies. The Building work is starting in the next month or so and is estimated to take 5 - 6 months which takes us to next March ish. Our tie in period ends October next year, although if we stay with our current lender we can move to a new deal in July. We may need to borrow some more in order to finish the extention so I am just considering options really.

I am trying to work out if it is best to remortgage and borrow some more before the end of the tie in period, paying the redemption penalty or to borrow else where then pay that loan off when we remortgage. Our LTV is currently less than 25% but after the extention should be less than 20%.

Part of the issue I'm not really sure how much, if any, we may need to borrow. If everything goes to plan it may only be a few thousand.

[Sarnie]

Your tie in period ending in October next year is not "ending soon"

Get your extension done and pick up your remortgage next summer, job done!

[MrC986]

OP, if you do need to ultimately remortgage to finish the work, just make sure you have some kind of working kitchen sink (a mortgage requirement) & some form of bathroom...it might sound obvious but I went to inspect two separate houses and the first had just taken out the entire kitchen & the second had no bathroom fittings - people can overlook the mortgage/lending requirements & hence a lender would apply “a value once works completed” which could delay the completion of the mortgage/release of funds.

As others have already said, depending on your lender/the amount you’re borrowing, it might be that your application is a “desktop valuation” or an external one I.e. from the street, although this would not pick up any substantial extensions/refurbishments with improved specification etc. & such inspections tend to be where you are using the same lender as currently.