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Getting extra loan with mortgage for extension

  • 02-08-2012 5:05pm
    #1
    foxy06
    Registered Users, Registered Users 2 Posts: 2,138 ✭✭✭


    Hi I am in the process of buying a house. Just wondering if its possible to get any extra money to build an extension. We are borrowing 1 and a half times our income. Its valued at 125000 and we are getting mortgage for 102000. What are our chances. Looking for anything between 20 and 40 k extra. What we want to do can be done in two halves hence the 2 figures. Will the bank laugh us out the door?


Comments

  • #2
    Turkish1
    Registered Users, Registered Users 2 Posts: 273 ✭✭Turkish1


    foxy06 wrote: »
    Hi I am in the process of buying a house. Just wondering if its possible to get any extra money to build an extension. We are borrowing 1 and a half times our income. Its valued at 125000 and we are getting mortgage for 102000. What are our chances. Looking for anything between 20 and 40 k extra. What we want to do can be done in two halves hence the 2 figures. Will the bank laugh us out the door?

    I would be astonished if the bank would give additional money to build an extension.

    There are a few ways you could approach it that I can think of and I have outlined them below:

    You are currently getting a c. 81% mortgage, see if you can get a 92% mortgage (115,000), this wille essentially leave you with €13,000 in cash after your deposit is paid. Then save the additional €7,000 yourself while paying the mortgage and do phase 1 of your extension. This will leave you with a higher mortgage repayment (maybe €50 - €100pm)

    Another thing that may help the saving is that if you are going with AIB, I believe that there is the option of a three month repayment holiday at the start of the mortgage, so essentially could put the first 3 months mortgage payment towards saving the additional €7K for the extension.

    Alternatively you could buy the house, save some of the money for the extension for maybe 6months or so and then apply for a personal loan (although the interest rates are alot higher than mortgage rates). I personally wouldn't suggest going this route but if you are ensure that the amount you are saving each month is higher than the personal loan repayment would be. I also don't know how a bank would react to applying for a loan so soon after taking out a mortgage.

    Lastly, do it the old fashioned way. Buy your house - everything doesn't need to be done immediately. Save the money up for your extension. Do phase 1. Then save up the money for the second phase, do phase 2. It may take you 2/3/4/5/6 years but so what. Does it REALLY need to be done as soon as you move in. It is an extension and not a renovation so I would guess that it doesn't.


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