Home-owner raises £200k to extend her home
The client: A longstanding client of Mortgages for Business who works full time in a senior management role for a multi-national organisation. She is also an experienced landlord with a portfolio of both residential and commercial property.
The property: A very tired 3-bed detached bungalow on a good-sized plot situated in a popular commuter town in the Home Counties. The client had gained planning permission to build a 2-storey extension which would turn the bungalow into a 5-bedroom house.
The finance: The client was looking to raise £150,000 against the property, (which she owns outright), to carry out the work. She estimated that when finished, the property would be worth in the region of £900k to £1m, taking it to a similar value of other properties in the street which have already been refurbished.
The solution: We presented several mortgage options to the client and she chose a 5-year fixed rate at 1.96% with a free valuation, free legal work and £500 cashback from a high street bank.
The mortgage application: In support of the application, we submitted a schedule of works and costs for the project which the bank’s underwriter studied closely. Having seen many similar applications, the underwriter felt that our client had under-estimated the cost of the planned luxury finishes and suggested she up the loan by £50,000. We explained that the mortgage product she had chosen allowed her to overpay the mortgage by up to 10% of the outstanding balance each year without penalty, so she could reduce her total borrowing quite quickly if she found that she didn’t need all of the additional borrowing. Consequently, she agreed to the underwriter’s suggestion.
The bank then issued a formal offer to lend £200,000. The client is now waiting to complete the deal pending buildings regulation sign-off on her architect’s plans, which she expects to receive any day now. Here are the details: