What’s the best way to get money to expand my house?
Ask Gareth: It’s not uncommon for people to use the money they’ve saved up in their home to pay for renovations.
I recently purchased a home with a ten percent down payment.
I’d like to add an extension to the house to increase space and value.
Could I borrow an additional 5% or should I wait until I own more of the property before borrowing against it?
Name and address are provided.
It’s common for people to use the equity in their home to pay for renovations, but it’s not the only option.
Keep in mind that a mortgage is a multi-decade debt, so any additional debt you take on will be attached to you for the duration of your loan.
What appears to be the most obvious source of funding for your project may turn out to be the most costly.
‘Things to think about’
Let us take a closer look at what you’re proposing.
Given that you’ve only recently purchased the property, you’d like to increase your mortgage.
A “further advance” is the term for doing this with your current lender.
During the term of your mortgage, you borrow more money from your current lender.
The rate will be determined by your lender; it may be the same as your current mortgage rate, but you may be charged a higher loan-to-value (LTV) rate, making it more expensive than your current mortgage.
The benefits are that you don’t have to change providers to get a loan, you can spread your payments out over a long period of time, and even if the interest rate is higher than your mortgage, it’s likely to be less expensive than an unsecured loan.
There are a few things to think about, the most important of which is whether or not your lender would actually give you a loan advance.
Lending to people with a 10% deposit is riskier for mortgage lenders, but borrowing another 5% of the value of your home would push it to the limit of what a bank or building society is willing to lend.
It is possible that it is not.
UK news summary from Infosurhoy
What’s the best way for me to get money to expand my home?
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What’s the best way to borrow money so I can extend my home?