Home improvements, mortgage or loan to fund?

[TiminYorkshire]

How to fund some home improvements?

Current status, ~2.5 years left on mortgage, currently will have funds to settle mortgage at the end of period (~£5-7k). LTV is now 10-15% but dropping by the month. House value likely £300-350k. The house is a “character” property in a sea side village built in the mid 1800s and was subject to a court case back then. It wasn’t built amazingly in the first place, and all the additions and alterations over the years have been of varying quality.

We considered moving but are now considering home improvements instead (knocking down kitchen extension, rebuilding it, knocking through to living room, replacing reinforced concrete roof on kitchen with something more suitable, potentially tweaking a staircase between 2nd & 3rd floor).

Guestimate man maths for this is £60-70k, but to be firmed up. We realise that this won’t all be captured as added value but plan to stay in this property for at least another 10 years.

Ideally we don’t want to raid all of our investments and savings to fund this, and with no mortgage repayments due in 30 months time will easily be able to service some form of loan or mortgage extension. In addition we’d prefer not to wait until the existing mortgage is finished with before doing the work/arranging such a loan.

So what are the options to fund? We’ll be able to support a proportion with available funds and saving over the winter/spring as we line up architects and builder availability, so wouldn’t be looking to borrow the whole 60-70k. I’ve done some brief googling:

1. Home improvement loan – not sure on rates and if this should/would be secured against the house, especially as the existing mortgage is secured against the house.

2.Additional mortgage to existing mortgage, sitting alongside is this doable? Would it require the same lender? How easy is it secure such an add on for home improvements?

3.Repay existing mortgage (with ERC) and rearrange new mortgage with the improvements? How easy is it to extend the amount mortgaged for home improvements?

Any thoughts on the above, or other ways to finance such changes? Any pitfalls or things to avoid?

[Sarnie]

Take a further advance from your current lender, this will be the simplest and easiest thing to lend that sort of money.

[TiminYorkshire]

Thanks for the above Sarnie. I presume disclosing the intent for the further advance is advised.

[Sarnie]

TiminYorkshire said:

Thanks for the above Sarnie. I presume disclosing the intent for the further advance is advised.

Yes, they will ask you.

At £60k-£70k they may ask you for Architects drawings, builders quote and/or planning permission........

[gangzoom]

We went with addtional borrowing from our lender. Secured substantially bigger loan than the figures quoted here, had all the drawings/quotes ready, offered to send everything but the lender had no interest in seeing them, they didn't even do a valuation visit as we asked for an 10% increase in value post completion to help keep the LTV manageable. Everything was arranged over the phone/email.

We are now just over 2/3 of the way done with the physical build.

All I would say is Goodluck......and don't over think things, because if you do, you will never start the project. Don't worry about the 'budget' because there really is no such thing when you are buidling something for you versus profit.

There is plenty of jepody at every stage which easily adds £££££, and the ofcourse random things that are nice to do even though not necessary. So don’t get precious about your savings, they will be raided, accept it and move on. Once tthe demolition work starts you are essentially 'ALL IN', and get use to hearing everyone telling you 'It'll be worth it when done' .

Edited by gangzoom on Saturday 25th November 07:28

[Mark83]

Sarnie said:

Yes, they will ask you.

At £60k-£70k they may ask you for Architects drawings, builders quote and/or planning permission........

I expected this but we borrowed an additional £150k with a second mortgage for an extension and home improvements, HSBC didn't ask for any of that, they just asked what the money was for on a phone call. I could have lied and walked into my local OPC and driven out with a GT3.

We'll combine the two mortgage when the terms align.

[Sarnie]

Mark83 said:

I expected this but we borrowed an additional £150k with a second mortgage for an extension and home improvements, HSBC didn't ask for any of that, they just asked what the money was for on a phone call. I could have lied and walked into my local OPC and driven out with a GT3.

We'll combine the two mortgage when the terms align.

"May"

It will always depend on the overall profile of the case......I've seen lots of cases stall where these were requested by the lender.

PS: If you wanted a GT3, thats just what you'd tell them, no need to say its for anything else.