Borrowing for extension

[Liamos]

I am looking for some advice.

My partner and I are looking to extend our house at a cost I would estimate of about €120k. The house has a market value of €430k and a mortgage of €320k.

We have just received a gift of €70k, so we need to borrow approx. €50k.

We are both in secure jobs with combined gross salaries of €110k.

Should we tell our bank that we have just received €70k or should we drip feed it into a savings account monthly to show that we are 'regular savers'? Or does it make any difference to obtaining the loan?

What are our chances of securing the €50k loan?

Apologies if I haven't given enough information, and thank you for replies in advance.

 

[44brendan]

There should be no issue with the borrowing requirement provided you can meet the Bank's repayment capacity criteria. Gross income is fine, but existing mortgage is high. Put your details onto any mortgage provider repayment assessment program and check your eligibility. This will be the primary criteria! Assuming you have a good existing repayment record with your Bank/BS.

 

[newirishman]

With current interest rates for unsecured loans being around 10% I would be very hesitant borrowing money for it.
Also, you'd also need to check if you can afford the repayment of the loan on top of the mortgage. Unless you get an explicit "house upgrade/extension" loan package or similar, you might not be able to borrow for more than 60 months, which would mean monthly repayments of around 1000 Euro for 50K over 5 years. If you can effort that, you might be better to potentially save up and postpone the extension built.

If not already done, I'd make sure that the cost estimate is as accurate as possible (engage architect, get plans and tender drawings, get at least 3 builders to quote) and then run the numbers again.

If you can "top up" your existing mortgage with good conditions this might be a different story, but no idea how willing your bank is to offer that. Simply put, spending €120K on an extension does not necessarily increase the value of the house by the same amount.