So how does this work? Who do you approach?

We have a fairly sizeable chunk of savings, probably 2/3 of the total estimated costs (using the think-of-a-number-and-add-50% method). How do we go about raising the rest?

Loans? Remortgage? Another option I’m unaware of?

Search for “self build mortgages” – basically they value the project on how much the finished project will be worth and lend on that. Money is released in stages as you build with surveyors valuations. Not cheap as rate is loaded and lots of hidden extra fees on top of headline rates. Can get money in advance of building but more expensive rates. Buildstore seem to be the biggest broker and the one we went through. Not sure if that is a good thing, I’ll feedback when out project is complete! Be prepared for long times to arrange and lots of paperwork..

Your current mortgage lender may advance you further funds to do the work – probably worth being your first port of call to see what they say.

As tommyo has said, self build mortgages could be a potential way to go…Monmouthshire Building Society are good for these.

Alternatively, you could look at a bridging loan or secured loan to provide the cash required for the build, then when it’s complete do a re-mortgage for the current mortgage amount and the total cost of the additional loan to tidy things up. These loans do tend to be expensive, but are more flexible in the short term.

All depends on how much you need I suppose though.

If it were me I’d be remortgaging for the full amount and keeping my savings as savings – then I would pay off some of it early in the future as I built up more savings.

depends on how much you need, up to say £10k and it might be worth looking at money transfer credit cards, something like these:

http://uk.virginmoney.com/virgin/credit-cards/money-transfer-cards/

yup, your mortgage lender will do a home owner loan. Usually the cheapest, easiest and fastest way of financing such a scheme.

We took out a 15k unsecured loan, rate was about comparable with SVR at the time, probably your best option if its in that ballpark bearing in mins a credit card won’t necessarily have enough credit and you get charged a transfer fee anyway.

We were in the same situation, had about 2/3 of the cost saved but needed a bit more. For us it tied in nicely with the existing mortgage deal finishing, so we just re-mortgaged and borrowed a little extra. As the rates had dropped we managed to borrow the extra, knock a couple of years off the term and still pay the same.

Just renovating my house with a remortgage, have savings but don’t want to use those as it’s nice to have cash just in case, so cheap to borrow at the moment and checked many figures. If I get a bonus I can easily overpay to reduce the amount over the next two years of fixed rate. Just don’t mention you have savings as I enquired a while back for extra borrowing against my house to help my dad with a quick purchase, I mentioned that I could pay it back within 9 months (dad’s retirement package) and was poo pooed immediately and a note placed on my account even though I’d stated it was an informal question, basically they don’t like to be used for “short term lending”

Am also about to set about trying to raise the money for an extension & loft conversion.

I have about 40% of the planned cost in cash/liquid assets (shares) but would rather borrow the whole cost of the work*. At current mortgage rates, the additional cost (i.e. interest on the amount borrowed) is relatively low.

So, my assumption is to start up the remortgage process (as we’re now out of our last deal and onto the expensive SVR) for the existing + new borrowing.

Worth bothering with a broker or shop direct?

*Means I get to maintain the savings as contingency/mortgage over-payment (thus netting the interest impact)/part of the rainy day fund.

I just went to my bank and re-mortgaged. Why would you spend savings when mortgages and the cost of credit is cheaper than cash? Re-mortgage, build your extension then use your cash to go on a nice holiday because the process of having an extension built is pretty stressful.

As I said I’ve just remortgaged. The cash went in the bank whilst I was riding my bike in the fod at the weekend so it was nice to come back to.
I jumped the svr gun because the rates are rubbish and because of that my deal has switched on the day the last ran out. If you’ve got a good current ltv with the added borrowing then I can’t see of an easier way. I kept my term the same and in the two years of this deal I will be back to where I was monetary wise before borrowing the extra. I stayed with my current provider as it was an easy option with very very little in the way of better offers. I also opted to load the fee into the mortgage as again on doing the sums it was the cheaper option.

Interesting stuff wrightyson.

My finances are slightly complicated – small bank mortgage with larger unsecured loan from inlaws*. Last time I got a mortgage from the bank was pre all the new rules.

What was the process like dealing with the bank? Was it a case of “I want to borrow existing + £ extra” and the go through the affordability hoops, or was it more complicated?

*I thought I was doing them a favour when they were worried about the banks going bust and losing all their money after the financial crisis, so agreed they could “invest” in our house. Never, ever, ever again…. 👿

In theory does the bank know of the loan from the outlaws? If not then your ltv will be excellent. I had a 40 min phone call going through all the affordability stuff. We managed to remortgage on the basis of my salary alone which required last year’s p60 showing my bonus and the last 3 payslips. It was all very easy which I think was mainly due to me staying with the same provider. I didn’t require a valuation so no fee etc as they based my ltv on the last valuation plus the inflation of prices locally.

In theory does the bank know of the loan from the outlaws?

No.

But it’s hard to hide a few hundred quid leaving your account every month, and I have no intention of committing fraud!

Without it current LTV is 22.5%. With it LTV is 35%. Additional borrowing will take us to 65% LTV (assuming no change in house value), which would also fit within a 3 x multiple of my base salary.

But it’s the thought of having to explain away an unsecured, undocumented loan in these times that’s making me cautious.

Let’s see if Natwest can match any of the corking deals out there….

Cheers wrightyson and sorry to The Flying Ox for hijacking your thread!

Hmmm…

LTV is currently about 70%, but we just started a new 5-year fixed rate deal last November. Could pay off a chunk using the savings to give us LTV of ~55%. I think the penalties for coming out of that will be prohibitive – around £8k.

I guess it’s just a case of sitting down with a calculator and working it out.

We took out a “home improvement loan” from our current lender – very similar Apr terms etc to existing mortgage. Then after the work was done re-valued, re mortgaged on a new deal and decreased our monthly payments Due to improved ltv.
Do some research and have a careful look out your last few bank statements through the eyes of the lender – they’ve tightened up a lot re affordability. I think that “loan” from inlaws will cause you (more) headaches?

But it’s the thought of having to explain away an unsecured, undocumented loan in these times that’s making me cautious.

I’ll update you tomorrow how that goes down.

We’re remortgaging at the moment and currently have an unsecured loan from a family member (£200pcm ending Feb), a paid back unsecured loan to sister in law (£1600) and another unsecured loan to a friend being paid back at £80pcm. Both the loans to were on credit card using 0% deals but we do have the cash available to write them off if need be. Told the advisor on Monday and she didn’t seem too fussed.

I’m more concerned by the fact nobody seems willing to explain just how the hell you get a house revalued without going to a dream merchant estate agent. If I went with Zoopla it reckons my house is worth £131k! (last house nearby sold for more like £100k – they have driveway whilst we have extension)

Do not and I repeat do not send any bank statements in unless they specifically demand them. As for the loan ask the outlaws if you can go off grid for a couple of months. Maybe take the money out cash point wise rather than dd. You know what you can afford. If you fiddle those figures to make it work then that’s how you end up in trouble…

Already done, that’s how they spotted the loans. Oh, and the fact I bank with them…

Given that your LTV looks very low with or without the in-law loan, and you think you can afford this extension, why not just to have an honest conversation with your mortgage provider or an IFA and see what they Offer you. You’re asking them to sell you a loan so they’ll love you, on the flip side if they say no then they may be worth listening to, the affordability criteria are there for a reason.

@ wrightyson – going off grid in this way is not something I’d advise (and isn’t something I’ll w doing): it’s effectively fraud. I’d rather not get a mortgage than get caught out for that..!

@squirrelking – let us know how you get on.

Didn’t even come up except when she mentioned it was ending in Feb (do you want to decrease the term?). Also used the term “risk averse” when describing our strategy so don’t thing they caused any alarm bells to ring. Will get final decision tomorrow but I don’t have any reason to think there will be a problem.

Good news. I need to get closer to a confirmed cost and then I’ll go through the same process.

I’m more concerned by the fact nobody seems willing to explain just how the hell you get a house revalued without going to a dream merchant estate agent. If I went with Zoopla it reckons my house is worth £131k! (last house nearby sold for more like £100k – they have driveway whilst we have extension)

We did just this recently..
Bought a bungalow for X hudredthousandmillion quid, had some work done, and then was quite honest and got an estate agent round to revalue.
Actually – I said “I don’t want to move, but I want to do more extending and if you said my house is worth trillions then that may change my view on ‘not moving‘”
He fully understood, valued the place, wrote a report, and I was quite surprised and it HAS actually made me think about moving rather than extending…
I haven’t been inundated with estate agent calls either.

I think the route I’ll go is to remortgage with current supplier (end of 2 year fixed) to come in at a lower rate given teh LTV has changed significantly..

DrP

Well we’ve decided to go with the free revaluation. Reason being to get 60% LTV it needs to be worth £119200, market average is £100000 and we have a £20k extension on the back that nobody else does.

Worst case it comes back so low we can’t make the difference and we get bumped up to the 75% LTV we were going for anyway (albeit not at todays rate).

Just need to figure out what they will be looking at and what we need to get cleaned up before they come round.

Well actually, having just read your whole post (helps doesn’t it) you MAY simply be able to use the Zoopla figures for your mortgage company…save any hassle.

See what THEY want first – tell them you’ve done XYZ and zoopla says it’s worth £130k, and leave it with them. That’s what I’d do if Zoopla hadn’t undervalued our place so much!

DrP