Capital raising to build an extension

We often have clients who are looking at capital raising to build an extension. They come to us with money tied up in their property, which they wish to release, so they can complete an extension. They often love where they live, but need a bigger kitchen, an extra bedroom, or they want to convert a garage. They don’t want to move when they have made a home for themselves.

In this blog, we will go through the process involved in releasing money from your property, using a recent example. Hopefully, it will give you all the information you need to decide if this is right for you.

Raising Money for an Extension

Alan and Tracy were referred across to me by a Financial Adviser they had been speaking with. They were looking to remortgage their home and release some equity from their home as they wanted to complete a sizeable extension to their home. Previously, they had always used their bank, Lloyds, for ease, but decided they want to look at the whole of the market to see if they could save money.

Mortgage Appointment

I visited Alan and Tracy at their home over Christmas and, while sharing some mince pies we discussed their requirements. They also had a small amount of debt and we discussed consolidating this into the mortgage to improve their cashflow.

We ran through several scenarios;

  • A like for like remortgage without borrowing any extra
  • Remortgaging and borrowing extra to complete the extension
  • Remortgaging and borrowing enough to complete the home improvements and consolidating debt

Mortgage Recommendation

It became apparent that option three was best for them. Despite borrowing more than their current mortgage, their outgoings were reduced by £971.22 per month. This was due to being on a really good interest rate and by extending the mortgage term. They also were paying quite a lot on their credit cards and loans.

With the work they were intending to complete, the house was going to be just how they want it and they couldn’t see themselves moving in the future. By arranging a 5 year fixed rate with TSB, Alan & Tracy also had the ability to budget each month and due to the flexibility of the mortgage product, could even overpay throughout, should they wish to.

Result

Alan and Tracy were delighted that all of their objectives had been achieved and they were able to start work on their new extension. If they had stayed with their bank, the interest rate would have been higher, their cashflow would not have been as strong and they would not have been able to clear their debts.

Next Steps

If you are thinking of remortgaging your home to complete some home renovations, then do give us a call on 01174 520 330. Our initial conversations usually last around 15 minutes.

Alternatively, you can email enquiry@lloydwellsmortgages.co.uk and let us know how we can help you.

We will discuss:

  • How much you can borrow
  • What that will cost
  • What fees can you expect
  • How Lloyd Wells Mortgages work
  • What insurances you will need
  • What documentation you will need to provide
  • Next steps

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage