Should I remortgage to build extension

L

Luckycharm

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HI,
I bought my house just over 3 years ago, it is a good size house to be fair only problem is the downstairs space (living area) is pretty small. There is room in the garden to build an extension which cost between 30/40k, have been thinking about it for ages as would make a big difference.
Have €315k left on the tracker mortgage left with around 27yrs left, have a loan about €4k and another loan which my parents took out to help with the deposit which is around €300 a month. This is not in my name but pay them a standing order each month to pay it off. HOuse is now worth just over the €500k mark and I am not thinking of moving.
I keep thinking should I wait till I pay that off which is 7 years time or try to remortgage- could I include that in it? Problem is as I have 2 young kids would rather benefit from the extra space now then wait 7yrs and regret it.
Currently with Ulster Bank should I ask them/ shop around? What is the best way to raise the extra finance - I am thinking remortgaging cheapest best option or would a home loan be better?
Any advice would be appreciated.
 
remortgage. Your house has equity - use it. You are adding to the value of the home by adding space - you wont lose out no matter what the market does. This is your home - you should enjoy it.

Just dont take out an extra bit on the side and go off and buy a car with it or something non-permanent.
 
Just because there is equity in the property you still need to ensure you can make the repayments. It sounds like that isn't going to be a problem as you're currently meeting loan repayments although the lender will assess based on multiples also. It is possible to take a top up for a shorter duration to the current mortgage so you could look into taking part of it over a shorter period which may cut down on the interest.
 
just remember to budget for extras, you may think 30/40 grand but there are always extras so don't get caught short. could you save by consolidating the other loans into the top up?
 
3 things you may consider:

- Capital appreciation: while building an extension will increase the value of your house, would it increase it by the cost of building that extension, e.g. €40k ? unlikely, so loss of money there

- How long do you see living in this house? if it is just for another few years, then you may think again about extending now.

- Can you meet the repayment? an extra €40k on the mortgage will cost you about €213 per month over 27years. Considering current mortgage repayment circa €1820 + €300 to parents + ?? (4k loan repayment) + €213 extra will give you a grand total repayment above €2400 per month... What % of your net income does that represent?
 
bacchus said:
3 things you may consider:

- Capital appreciation: while building an extension will increase the value of your house, would it increase it by the cost of building that extension, e.g. €40k ? unlikely, so loss of money there

- How long do you see living in this house? if it is just for another few years, then you may think again about extending now.

- Can you meet the repayment? an extra €40k on the mortgage will cost you about €213 per month over 27years. Considering current mortgage repayment circa €1820 + €300 to parents + ?? (4k loan repayment) + €213 extra will give you a grand total repayment above €2400 per month... What % of your net income does that represent?
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Thanks for the advice, I am not doing it for Capital appreciation as I can see myself in the house for a long time, close to family, sports clubs, commute to work not too bad. I would hope to consolidate the loan payment into it. Should I look to consolidate the other loan which would be over in 6 and half years - don't think so.
My current mortgage payment is €1454 not €1820 after the last increase. I get by each month fine like anyone else have tight months but generally not too bad. I don't lead a lavish lifestyle anyway have an 8yr old car, now that I have kids don't get out that often socialising that is, I play alot of sport. I just think we would really benefit from the extra space. My house is a modern 3 storey house only problem is that it the same size all the way up so the bedrooms are big but the downstairs is relatively small so if we have any visitors it gets a bit tight.
 
If you need the space now and you can afford it, it makes sense to re-mortgage.

I'd also consolidate any loans you have, but make extra pyments into the mortgage to ensure the amount of the loan is paid off in the same amount of time that it would have been. This gives the advantage of the lower interest rate without extending the term of the loan. Make sure the mortgage you get enables to do this.
 
Luckycharm said:
My current mortgage payment is €1454 not €1820 after the last increase.
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I based my calculation on a tracker ECB +1.25% (5.25%), hence €1820.

The best tracker you can get is NIB at ECB + 0.5% (LTV < 50%) which would give a repayment of €1681 per month..

To have a monthly repayment of €1454 ( €315k over 27yrs), you need to get a rate of 3.2%, which is below the ECB rate!!! And you seem to be on variable based on your above statement.

Are you sure that you got outstanding balance/duration/monthly repayment right?
 
How did you manage to get so much tax relief?
With ECB+0.5% mortgage, e.g. €1681 pm, your relief is €227 (€1681 - €1454)..

Figures do not add up, either outstanding balance, duration, rate or monthly repayment is incorrect..
 
bacchus said:
How did you manage to get so much tax relief?
With ECB+0.5% mortgage, e.g. €1681 pm, your relief is €227 (€1681 - €1454)..

Figures do not add up, either outstanding balance, duration, rate or monthly repayment is incorrect..
Click to expand...

Well there is me and my wife on the mortgage so we both get tax relief and yep that was my monthly payment this month anyhow. So what is my best bet just contact my own bank or get a mortgage broker to shop around?
 
bacchus said:
How did you manage to get so much tax relief?
With ECB+0.5% mortgage, e.g. €1681 pm, your relief is €227 (€1681 - €1454)..

Figures do not add up, either outstanding balance, duration, rate or monthly repayment is incorrect..
Click to expand...

Assuming the OP borrowed €325k 3 years ago over a 30 year term, the figures supplied do add up.

€325,000 over 30 years @ 4.95% = €1719 pm gross
Less TRS €266 pm = €1453 pm net.
 
Hel_n said:
Less TRS €266 pm
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Got it now... i was still working with the 2006 relief figure of €1600... Forgot it has been increased to €3200 in the last budget.
Hence €266 *12 = €3192 is below max trs mortgage relief.
 
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