Building an extension has always been an attractive option for homeowners. Not only can a bigger kitchen-diner or extra bedroom make your day-to-day living even more comfortable, but in many cases, it could add value to your property.
The desire for extra space has become even more apparent during the pandemic as many of us swap the daily commute for working from home. A trend that shows no sign of halting even as we gradually return to normal.
So, why aren’t more people building extensions? The answer, of course, is cost. Or more accurately, a lack of knowledge about how to finance an extension.
Obviously, the most straightforward and advisable way of financing an extension is through the use of savings. While this may sound like a no-brainer, there may be people who are wary of spending a large amount of their hard-earned money in one go.
Yes, it could reduce the amount of money you have available to you immediately, however, the potential saving in the long run could be huge: taking out a personal loan, or even a further advance on your mortgage (where your lender gives you additional funds on top of your mortgage), would mean taking on more debt. Loans and further advances carry interest charges that increase the final amount you payback.
So, even though your savings would be reduced by financing an extension this way, the long-term gain would far outweigh the initial outlay because you wouldn’t be paying any extra interest charges, and your property could be appreciating in value!
However, if this is not an option, then some homeowners, can use their mortgage to finance an extension. This can be done by remortgaging or arranging a second charge loan, provided there is enough equity based on the LTV.
If your mortgage deal has 6 months or less left on it, we can scan the market to find you the best deal to suit your circumstances. Since Charles Cameron & Associates is an independent, whole of market broker.
How much you can borrow depends on your property’s ‘equity’ which is the difference between your current loan size and the market value of your home. Of course, borrowing more will mean you need to repay more. However, with interest rates at such a low level at the current time, the increase to your monthly payments may be less than you think. You could even end up paying less per month depending on your interest rate!
With expert mortgage advice from Charles Cameron & Associates, you may find that your extension is more affordable than you’d previously imagined.