Top up 3 mortgages now or wait till ready to use the money?

L

landlord

Registered User
Messages
1,080
I am planning a fairly large extension and I have been approved for a top up of three of my mortgages to pay for this extension. I have not even started the planning process yet for this extension. The loan offer is good till November the 27th after which I will have to apply again.
My dillema is the valuations done on the three properties priced them at a fairly reasonable prices and allowing me to push each mortgage up to 80% Loan to Value will provide enough for the extension. (The rent still just covers these extra top ups). If property prices fall further over the next few months, a new valuation will reflect this and I wont be able to top up enough to pay for the extension.
However if I take out the money now I am paying the extra mortgage right away. The "purpose" of these top ups is to extend my own home so I can not offset the interest against the rental income either. Also I will have this money sitting in my bank for 6-months to a year earning interest before I am ready to extend, but I have been told that I will be paying tax on this interest too at the 42% rate for me?? (not sure if this is true?)
Any suggestion?
thanks....
 
You will need to contact your lender and see when they consider drawdown to be ie when cheque is cashed or issued to help you decide.

Also have you looked into whether they will allow you to draw down in stage payments on the three top ups?
 
you can apply now and draw down the money within 6 months with some lenders.
 
There are three mortgages and I can draw down one at a time, but I must draw down all of them (together or individually) by Nov 27th. After that date I must re-apply and get new valuations.....which may be a lower value if property prices continue to fall.
 
Crunch the numbers - e.g estimate the net cost of drawing the down the money early (factoring in any net deposit interest it would earn in the meantime if applicable) and compare it with the potential situation arising if a lower valuation led to not being able to borrow as much (e.g. by checking asking/selling prices for similar properties over more recent periods).
 
I received a phone call earlier from the person who deals with mortgages at NIB bank, letting me know that the valuations are good for 2 years. Which is great news She said, because of the trend of house prices over the last few years up to now they havnt seen any risk that the price will drop to lower than the valuation. However she did say that due to the current trend of property values which are now on the decline, the 2 year validity of valuations may be looked in to.
 
You must log in or register to reply here.
Back
Top