Remortgage for house extension, best time to take it out

12
Posted 2nd Jul
Just a quick question on peoples thoughts. With the current economic climate and a planned start for the extension to be built next March/April, what would people advise on when to take out the remortgage. I think the % on the borrowing was 3.9% with the current mortgage at 2.9%

Will mortgage rates drop? Go up? Take it out now or wait til nearer the time?


Thanks for your help
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3.9 seems quite high considering your current rate is 2.9 and the base rate is 0.1.

I've been considering this very topic recently actually so I'd be interested in the replies
I remortgaged for an extra £60k for loft conversion and some other improvements right before lockdown with Santander at 1.63% seems like a good time to be remortgaging I think! (Not in any way a financial expert)
This is pure crystal ball bulls**t. It might go up, it might go down, it might stay where it is.

NOBODY knows apart from the so called experts who have a guess and then high five each other because they got lucky.

The only thing you need to worry about is being able to afford the repayments. I'm not talking about if they get to 10% but if you started to struggle if they went up 0.5% I'd be concerned that you'd be better off doing nothing.
I dont think Mortgage rates are going to go up anytime soon as i dont expect the base rate to go up anytime soon - A pure guess could be <=1% for at least the next 5yrs maybe even 10yrs
darlodge02/07/2020 12:24

3.9 seems quite high considering your current rate is 2.9 and the base …3.9 seems quite high considering your current rate is 2.9 and the base rate is 0.1.I've been considering this very topic recently actually so I'd be interested in the replies


It is actually 3.49% which still seems a touch high for me
Mortgage rates won't likely go up as they'll keep interest rates low to encourage spending and keep the economy going.
What is likely to happen is banks increase there criteria and checks while lowing the maximum loan to value 95% are gone I'd expect it anything more then 85% to be hard get and/or expensive.
That coupled with the housing market stagnating or even dropping could affect you if your remortgaging for a large amount.
joedastudd02/07/2020 17:34

Mortgage rates won't likely go up as they'll keep interest rates low to …Mortgage rates won't likely go up as they'll keep interest rates low to encourage spending and keep the economy going.What is likely to happen is banks increase there criteria and checks while lowing the maximum loan to value 95% are gone I'd expect it anything more then 85% to be hard get and/or expensive.That coupled with the housing market stagnating or even dropping could affect you if your remortgaging for a large amount.


Looking around the £40k mark for the extension and the after speaking to the bank today would be offered. For me the only issue was
Is 3.49% too high
Better to take it out now, even though work won’t be done until next year
justonemore02/07/2020 17:36

Looking around the £40k mark for the extension and the after speaking to …Looking around the £40k mark for the extension and the after speaking to the bank today would be offered. For me the only issue wasIs 3.49% too highBetter to take it out now, even though work won’t be done until next year


Have you looked at how much you could save in the next 8ish months, could you help with the work to reduce the costs and what's your credit like?

The thing is you'd hope the £40k extension would add at least £40k to the value of the property however as your remortgaging based on the current value of the property your going to get a higher rate due to the loan to value ratio.
So if your property is worth £200k and your currently have £120k left on the mortgage your at 60% ltv, by remortgaging for £40k your up for 80% ltv.
If your remortgaged after then your ltv is just over 66%.

If you can bridge the £40k or delay the payment until you've had time to get a valuation then remortgage you should get a much better rate and lower cost over time.

You'd have to do the maths and run the interest comparisons.

My main worry with a £40k spend/investment is the stability of jobs at the moment. Last think you want is to have higher mortgage payments or loans and get made redundant.
joedastudd02/07/2020 17:34

Mortgage rates won't likely go up as they'll keep interest rates low to …Mortgage rates won't likely go up as they'll keep interest rates low to encourage spending and keep the economy going.What is likely to happen is banks increase there criteria and checks while lowing the maximum loan to value 95% are gone I'd expect it anything more then 85% to be hard get and/or expensive.That coupled with the housing market stagnating or even dropping could affect you if your remortgaging for a large amount.


The only way mortgage rates can go is up. Millions will be losing jobs over the next 6 months, then we have Brexit. Things are likely to get much more expensive causing inflation, inflation equals higher interest rates. Anyone remember the 80's and mortgage rates over 15%? Highly unlikely to go that high again but i'd be surprised if they don't start to rise next year. Now is the time to clear debt, not take on more.
joedastudd03/07/2020 00:29

Have you looked at how much you could save in the next 8ish months, could …Have you looked at how much you could save in the next 8ish months, could you help with the work to reduce the costs and what's your credit like?The thing is you'd hope the £40k extension would add at least £40k to the value of the property however as your remortgaging based on the current value of the property your going to get a higher rate due to the loan to value ratio.So if your property is worth £200k and your currently have £120k left on the mortgage your at 60% ltv, by remortgaging for £40k your up for 80% ltv.If your remortgaged after then your ltv is just over 66%.If you can bridge the £40k or delay the payment until you've had time to get a valuation then remortgage you should get a much better rate and lower cost over time.You'd have to do the maths and run the interest comparisons.My main worry with a £40k spend/investment is the stability of jobs at the moment. Last think you want is to have higher mortgage payments or loans and get made redundant.


Thank you very much for this insight
Azwipe03/07/2020 03:11

The only way mortgage rates can go is up. Millions will be losing jobs …The only way mortgage rates can go is up. Millions will be losing jobs over the next 6 months, then we have Brexit. Things are likely to get much more expensive causing inflation, inflation equals higher interest rates. Anyone remember the 80's and mortgage rates over 15%? Highly unlikely to go that high again but i'd be surprised if they don't start to rise next year. Now is the time to clear debt, not take on more.


Thank you
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