Re-Mortgaging - Mad in current climate?

Obelisk29

Hi

I think my hands are pretty tied anyway but wouldn't mind a few people's penny worth!

Set the scence - me, partner, 2 kids, dog on the way, mid-terrace, approx 1,050sq foot. Son - vast lego collection. Daughter - vast clothes collection. Son, who shows every sign of growing to about 6' 8" has small box room.

So, we're thinking of getting the attic converted to free up some extra space as well as carry out a few other improvements. Moving in the medium term is not an option - schools, prices for local 4 beds - so it seems like the only possible way to save my sanity!

Only thing is, I'm getting more and more worried about the way the economy is heading - not so much personal circumstances but the economy as a whole.

Our current mortgage is approx 112k with 15 years to go and the house is probably worth around 675k. We're looking at bringing the mortgage up to a nice round 165k over the same term.

Loan to value ratio would still be pretty low but it's still adding 50%-ish to the mortgage. It's (just) affordable even with a bit of an interest rate rise, if thats on the cards.

Even if there is a major economic downturn I don't think it'll go to complete sh!t but...

Am I being over cautious, or should we hold tight for a little while and see how things go?

Any advice appreciated - sorry for rambling.

o29

patrickolee

You're in pretty good shape and its your home you are spending the extra money on. Really wouldnt worry about it if I were you. My opinion - you're worrying too much.

seamus

In the short-term, you wouldn't get an extra 50k on the purchase price of your house for an attic conversion. But the fact that you're doing this tells me that you're looking at sitting on the house for another ten years or so. So you're extra mortgage is covered really.
I do think you're worrying a bit much. You don't have a huge mortgage and there's no indication that rates will rise very much in the short to medium term. Provided you're happy with the security of your own job, then the state of the economy shouldn't be a factor.

The_Conductor

Remortgaging is never a bad idea- even if only to get improved terms on your repayments. I've had a few quotes for attic conversions along with other interior work- as I'm thinking that I'm stuck for a while- even if I could do with a bigger place- my quotes are all a lot less than 50k though (even with multiple Velux windows, suspended floors, wrought iron spiral stairs to the attic and other things). I think what you're suggesting is a good idea, and more to the point is what you need at this point in time- I would seriously recommend you shop around for the attic conversion though- there are crews of builders out there ready to give their right arms for a bit of work like you need done......

Glenbhoy

smccarrick wrote: »

Remortgaging is never a bad idea......

I'd say that's a bit of a sweeping statement - imo many people countrywide are going to pay the consequences for remortgaging stupidly, short term expenditure should never be paid for via long term debt.

That aside, in this instance it seems like the obvious solution for the op and (s)he's done the maths and imo it would be a good move, if moving away from the locality is not an option.

The_Conductor

Perhaps I should have clarified that statement- I meant renegotiating mortgages, or moving mortgages in order to get better terms, rather than simply withdrawing equity from a property, in my previous statement. A lot of the US problems at the moment are of course a direct result of people remortgaging to withdraw the (now non-existant) equity builtup in their properties. It was a great party for them, while it lasted- now the whole world has to try to rescue the mess they've created for financial systems......

Afuera

I agree with all the other posters, in your circumstances it makes sense to do this. No harm in being cautious though; it is better to deal with any pitfalls now rather than jumping right in. A mortgage of 165k over 15 years will cost you roughly 1,300 p/m which does not sound excessive at all.

smccarrick wrote: »

I think what you're suggesting is a good idea, and more to the point is what you need at this point in time- I would seriously recommend you shop around for the attic conversion though- there are crews of builders out there ready to give their right arms for a bit of work like you need done......

It makes sense to shop around, but attic conversions and extensions are one of those things that if done badly can actually devalue a house. I would avoid picking up the first lads you find out of work who are willing to do the job at a reasonable price. A well established, reputable company that stands by the work they have done and are willing to show you other jobs that they have done similar to your proposal should help to avoid any complications later on.

beeno67

Afuera wrote: »

I agree with all the other posters, in your circumstances it makes sense to do this. No harm in being cautious though; it is better to deal with any pitfalls now rather than jumping right in. A mortgage of 165k over 15 years will cost you roughly 1,300 p/m which does not sound excessive at all.


It makes sense to shop around, but attic conversions and extensions are one of those things that if done badly can actually devalue a house. I would avoid picking up the first lads you find out of work who are willing to do the job at a reasonable price. A well established, reputable company that stands by the work they have done and are willing to show you other jobs that they have done similar to your proposal should help to avoid any complications later on.

I would even go a step further and contact an architect. Get the house properly surveyed first. Never put in a spiral stairs if you want the room to be used as a bedroom. Be very wary of companies that say "we specialise in attic conversions" as this is code for "we are so rubbish you wouldn't trust us with anything except an attic conversion". Typically an attic conversion if done properly will add about 5% to your property's value. About 30k in your case. If done badly it can reduce the value. Proper insulation also is essential and so rarely done.

Obelisk29

Guys, thanks for all the replies - much appreciated.

Whilst the attic is the main job (about 25k) we're going to get a load of other stuff done as well - new stairs downstairs, replacing all internal doors, wooden floors, new bathroom suite, etc.

The guy who's doing the work has done 2 conversions for neighbours and his work is excellent so I'm happy with him.

I guess I'm worrying too much and as we will be here for another ten years I suppose I should sign the forms!

Thanks again,

o29

Gurgle

Obelisk29 wrote: »

Whilst the attic is the main job (about 25k) we're going to get a load of other stuff done as well - new stairs downstairs, replacing all internal doors, wooden floors, new bathroom suite, etc.

€25k is very pricey for an attic conversion at the moment, you will get it done for a lot less if you price around.

As for the other €25k - For a bit of unnecessary redecorating!
Its your money, but why throw it away?

johnnyskeleton

Gurgle wrote: »

As for the other €25k - For a bit of unnecessary redecorating!
Its your money, but why throw it away?

It's not unnecessary if it is done to improve your quality of life in the house (as opposed to redecorating in an attempt to add value to the house).

iguana

Gurgle wrote: »

As for the other €25k - For a bit of unnecessary redecorating!
Its your money, but why throw it away?

I absolutely agree. I'd be loath to re-mortgage for anything, but if the attic conversion is immediately necessary then fair enough. But I'd pay for the other re-decorating bit by bit as I could afford it.

beeno67

iguana wrote: »

I absolutely agree. I'd be loath to re-mortgage for anything, but if the attic conversion is immediately necessary then fair enough. But I'd pay for the other re-decorating bit by bit as I could afford it.

Why? Would you borrow for a new car? Interest rates are 5% and will possibly fall. Seems ridiculous not to pay for it by re-mortgage if OP feels the work is necessary.

iguana

beeno67 wrote: »

Why? Would you borrow for a new car?

Absolutely not. The only borrowing I have ever, and would ever want* to take on is a mortgage and I'd do all I could to pay that off as soon as I could. And it's mis-leading to say interest rates are set to fall. They are still at a historical low. The ECB has made comments which suggest that while it won't rule out lowering rates it would rather not. And with the current credit crunch any reduction in rates is unlikely to be passed on to the consumer.



*I'd borrow for life-saving medical treatment for a loved one if necessary.

beeno67

iguana wrote: »

And it's mis-leading to say interest rates are set to fall .

I didn't. I said possibly fall.

patrickolee

iguana wrote: »

Absolutely not. The only borrowing I have ever, and would ever want* to take on is a mortgage and I'd do all I could to pay that off as soon as I could. And it's mis-leading to say interest rates are set to fall. They are still at a historical low. The ECB has made comments which suggest that while it won't rule out lowering rates it would rather not. And with the current credit crunch any reduction in rates is unlikely to be passed on to the consumer.

it's mis-leading to say interest rates are at a historical low ... Rates are 50% higher than they were just 4 years ago! Besides it is more likely that rates will fall rather than rise at this stage, especially with the US talking about another major cut; these things are relative. Another misleading statement you made was that any reduction in rates are unlikely to be passed on. This is incorrect. People who are in trackers will automatically get any cut passed on regardless of any credit crunch. A tracker is x basis points above the ECB. ECB falls, tracker falls. But it is true to say that new customers might not be able to get the same rate

is_that_so

Gurgle wrote: »

€25k is very pricey for an attic conversion at the moment, you will get it done for a lot less if you price around.

As for the other €25k - For a bit of unnecessary redecorating!
Its your money, but why throw it away?

Price is relative. If you are happy with price and quality then it's good value to you whatever way anyone else wants to spin it.
TBH I am not sure how useful most of these comments are to the OP. Life is not all about money but each to their own.

My own two cents worth. I think it makes sense. Improving the life of yourself and your family and considering €50K will hardly get a child to puberty these days I would say worth doing. There are also factors like where would €675K get you these days, the neighbourhood you already live in, how a move would affect the family and the sheer hassle of moving. All things considered IMO it is probably the only realistic option.

iguana

patrickolee wrote: »

Another misleading statement you made was that any reduction in rates are unlikely to be passed on. This is incorrect. People who are in trackers will automatically get any cut passed on regardless of any credit crunch. A tracker is x basis points above the ECB. ECB falls, tracker falls. But it is true to say that new customers might not be able to get the same rate

By re-mortgaging you make a new contract which makes you a new customer as far as rate dropping is concerned. I live in the UK where rates have dropped and despite what the banks said the day the rates were dropped they are not being passed on in most cases.

And yes rates are at a historical low. 4% is still very low. Inflation is still rising faster than the ECB's target rate and as controlling inflation is the ECB's mandate, not stimulating the economy then rate drops are far from assured. My guess is that in the short term they will hold the rates while they assess their next move. Anybody who is counting on a rate drop to justify their mortgage or re-mortgage should not be getting a mortgage.

Victor

If you want, add the attic space on a cautious basis - good structure, good insulation, minimum frills. It is for you and your family to decide frills. Note you should comply with the Building Regulations, especially if this is already a two-storey house. If there is a fire 6' 8" doesn't get him to the ground. Potentially make the attic a playroom and not a bedroom. Attic toilet / shower room or not?

patrickolee wrote: »

it's mis-leading to say interest rates are at a historical low ... Rates are 50% higher than they were just 4 years ago!

Historical abberation!

astrofool

They're 100% higher than 4 years ago

lfcfowlerlfc

beeno67 wrote: »

I would even go a step further and contact an architect. Get the house properly surveyed first. Never put in a spiral stairs if you want the room to be used as a bedroom. Be very wary of companies that say "we specialise in attic conversions" as this is code for "we are so rubbish you wouldn't trust us with anything except an attic conversion". Typically an attic conversion if done properly will add about 5% to your property's value. About 30k in your case. If done badly it can reduce the value. Proper insulation also is essential and so rarely done.

hello, just interested, why not use a spiral stairs into an attic? Is it against regulations? I was thinking of converting an attic of a semi detached house. the best way to access the attic from the first floor would be a spiral stairs i think. it takes up less space

The_Conductor

lfcfowlerlfc wrote: »

hello, just interested, why not use a spiral stairs into an attic? Is it against regulations? I was thinking of converting an attic of a semi detached house. the best way to access the attic from the first floor would be a spiral stairs i think. it takes up less space

You'd imagine it takes up less space- but you'd actually be very surprised. The entire sweep of the stairs has to be accommodated over a floor (i.e. you cannot overhang it over a landing- even if it makes sense in your head- from a construction perspective it doesn't). You really need to get professional advice on this.

beeno67

lfcfowlerlfc wrote: »

hello, just interested, why not use a spiral stairs into an attic? Is it against regulations? I was thinking of converting an attic of a semi detached house. the best way to access the attic from the first floor would be a spiral stairs i think. it takes up less space

3 Main reasons.
1 getting furniture up a spiral stairs is difficult
2 much more importantly is ease of access or escape. Imagine your house is on fire, how quickly could you get down a spiral stairs and not kill yourself in the process?
3 Buyers tend not to like them so can make resale in future more difficult.