First for us, re-mortgaging and wanting to draw out a reasonable amount of equity to build a single storey extension / bit of downstairs remodelling
So far we've picked an architect, have a quote for the design work and a rough idea of what we want / very ballpark how much it would cost
Discussed with lender increasing loan amount - it would still be under 60% LTV and affordability looks fine. However, in order for the extra amount to be loaned we have been told we need a builders quotation to evidence our intent on what we plan to spend the money on.
But....we are no where near at that stage, to ask a builder to quote, we haven't commissioned the design, and the design is dependent on the budget available...chicken and egg.
Anyone else had this recently? What did you do? The advisor was a little vague on whether an architects quote for design work counted or not (initially said yes, then said no).
Santandar
Our lender didn't care at all. In fact they were very keen to lend us more and really didn't ask any questions or ask for evidence outside of general affordability. That was HSBC
Ah should have said we are looking to change provider as it’s a much better deal
We had this when we remortgaged a few years ago. Our existing lender (Scarborough), who had 5 years perfect payment record for us etc wanted quotes, payslips back to when I had a paper-round etc - all stuff they knew - so we told them to do one and remortgaged with someone much easier to deal with (in this case Lloyds).
So, yes some lenders do want this kind of info and others don’t care so much.
Ah should have said we are looking to change provider as it’s a much better deal
We were changing provider too. They were actually very easy to deal with as well as offering the best rate at the time
I would be treating any builder’s quotes with a degree of scepticism given the huge variation in material costs and availability in the last year. Some builders are scaling back because they can’t get materials or are asking for silly price rises.
We are seriously considering delaying the work for a year to see how this whole mess pans out, but we’ve been waiting for 5 years now and something always throws a spanner in the works, I’d like to move jobs at some point too, but that also seems to be a problem when remortgaging. Plan b is a 2 year fixed, commission design phase, go through planning and “break earth” and do a small element and then borrow for the remainder when things are settled. But .99% deals may not be around then.
Crystal ball anyone?
You shouldn't need to do this. A decent broker will find you a deal with a bank that will just give you the money.
We found HSBC a blimin nightmare. (It was 5 years ago tbf) They decided after offer in principle that they needed full audited accounts for my business despite T/O below £1m and the fact that both the business and we personally bank with them. They had all of the information they could need including 5 years of accounts.
I believe they just meet a quota for loan value/risk per quarter, month or week and just start throwing hurdles in the way rather that help constructively or suggest you go elsewhere.
I would have thought employing an architect to design something would show more intent than asking a builder for a free quote on a vague idea...
Get a different broker!
Construction materials have risen, on average, by c20% in 12 months; at the extreme, structural steelwork and some timbers have increased by 60%.
The only (relative) certainty a builder can give you will be his labour rates; material pricing and availability are fraught with uncertainty.
Are Santander referring to an estimate which, in today's market, is nothing more than a builder's best guess or do they really mean a quote?
If a quote, good luck with getting that from anyone - unless you/your lender are prepared to accept a number which is heavily loaded with £ risk to cover a builder's exposure.
Good luck.
Other side of the world, but we've just applied to increase our mortgage (with the same lender) to do some reno's and it's pretty much the same deal. We even had to have a house valuation completed again.
We've had designs for a year now, gave up on quotes when they were coming out at double the estimate (frankly enough to knock it down and rebuild completely). A year later we've decided to break it into two stages, and recognise that the second stage could be a few years down the track.
Finally got a builder to provide a labour only quote with materials estimates at current prices + 12% profit.
To back up the 20% increase in materials, my F-in-law is just finishing a build and returned some unused timber. He got the full original cost refunded because they can resell it at +20% now!
Yes building costs have increased, we just had a roof done in nw uk. Timber has doubled in price, skips the same price but due to demand has to be booked weeks in advance. The roofer stuck to his year old price but is flat out for a year, he s done it for 20 years and never been so busy.
Just look around, there were skips on every road this summer when I was there.
However, in order for the extra amount to be loaned we have been told we need a builders quotation to evidence our intent on what we plan to spend the money on.
Since you don't actually need the money until you need to pay the bills, why is this an issue?
Construction materials have risen, on average, by c20% in 12 months;
The materials I’m using at present have variously doubled and quadrupled in price since last year and lead times for deliveries of pretty mundane stuff are a month or more.
if you have a time machine borrow every penny you can go back one year and buy all the chipboard flooring you can and sell it again now!
Discussed with lender increasing loan amount – it would still be under 60% LTV and affordability looks fine.
Im assuming this is based on the current value of the house and doesn't take into account the value added to the house by doing the extension therefore what you do with the money released by remortgaging should be irrelevant to the lender as long as you can pay it back....as others, id find another lender
A quick note as to why they may be asking for a quote. Much like insurance, mortgages are underwritten.
Some lenders will not, for example, allow for extra funds say for debt consolidation or a spanky holiday and others will have triggers around how much extra equity is being released.
So, they will be asking for evidence as you’ll have tripped some underwriting criteria or another so they can evidence that you’re getting the extra cash for what you say you are.
Like insurance co’s though all have different criteria so not all will be so bothered. Of course you could get a quote and still use the money for something else but the mortgage will have ticked the box they need to.
I was thinking of asking for quotes for labour and materials at cost. least that way you know what part of the quote is fixed and what is variable.
we are also thinking if maybe doing he work on phases due to the current situation. it's crazy. surely things will settle in 6 months or so when we want to do the work
and the reason for borrowing the money now, is it will be on a good rate. it borrowed later it would be a second charge and currently that is double the interest rate
given all the massive increase in costs it is surprising builders are so busy. there must be a lot of people thinking twice about going ahead with work during what looks like a bubble
If Santander are offering a very good deal then either it’s because they are good as rejecting the customers that end up being expensive or they have too many customers and need ways to eliminate some. Their money, their rules, you can go somewhere else.
If I was lending you money I would want to know how you know it will be enough- because I don’t want to try and sell a house with a half built extension when you suddenly realise its more than you thought. Nor do I want to unpick a new mortgage 6 months in when you want to borrow more to finish the job. Nor do I want to give you a firm offer that you then change the requirements for. I’m not sure your catch 22 makes sense - if you are definitely in the correct affordability and LTV ranges then why is the bank setting the budget before you’ve discussed with builders? Architects are notoriously inaccurate with cost estimates. If the cheapest price is 10k more than you’ve asked Santander for - are you going to change the budget or borrow more?
skips the same price but due to demand has to be booked weeks in advance. The roofer stuck to his year old price but is flat out for a year, he s done it for 20 years and never been so busy.
If your roofer is any good and near East Lancashire there's a few people on here who would love his details
I was thinking of asking for quotes for labour and materials at cost. least that way you know what part of the quote is fixed and what is variable.
I’m not sure if you are vague on a start date you’ll get a fixed quote for Labour easily - most builders will be using subbies for Labour and their rates are determined by the market not the price the main contractor offered months ago!
we are also thinking if maybe doing he work on phases due to the current situation. it’s crazy. surely things will settle in 6 months or so when we want to do the work
I wouldn’t bank on it. There are many factors involved. 1. House prices went up so people can’t afford to move or prefer to extend; 2. Increased WFH = different needs, the first wave may be over but now others are understanding the future I think there will be more people extending to support this long term; 3. Brexit related materials supply issues; 4. Covid related materials supply issues; 5. brexit related labour shortage (a lot of those eastern European builders we made unwelcome have left!); 6. Covid related labour shortage - both staff sickness and foreign labour who have gone back to families overseas; 7. Furlough related labour shortage - some people would prefer to get paid to do nothing; 8. Some of the people with buildings needs have found themselves cash rich due to reduced commuting and foreign travels and so are willing to throw cash at getting the problem solved…
Some of those issues will change in 6 months but some are not going to; and some might get worse!
I’m obviously not describing the scenario particularly well
Bank is not setting the budget,
We are at the early stages of design, have a good idea of what we want but not settled on it.
We have a ballpark 60-90k estimate depending on materials / finishing.
We have asked the bank if they will let us draw down 100k equity,
They have said that’s fine from a LTV and affordability perspective
But you need to give us builders quotes to prove how you intend to spend the money
We are unlikely to get any joy with builders quotes, because we haven’t decided on the design (which may have to be altered once it goes through planning), and because if they are rushed of their feet why would they bother with such a speculative project at this stage
I think we will go with a different provider, it’s only 0.1% difference in rate
Mortgage needs to be sorted by Dec, if we go with a second charge mortgage at a later date it will have a much higher rate
If Santander are offering a very good deal
Ah Santander, missed that. Yes, we're with them and they are in the category of won't offer extra money for debt consolidation. Their concern seems to be FCA driven (and with some merit) about affordability and there nearly always being better options to consolidate debt than over a long mortgage period.
It does not surprise me they are asking for quotes as, whilst if you meet their lending criteria they are excellent and quick, they are a little more fussy than some on the actual offer in the first place.
You shouldn’t need to do this. A decent broker will find you a deal with a bank that will just give you the money.
I did last year ... Have always sorted mortgages myself but previous place were being silly (hed been with them for 10+ years, extra money I was asking for was well below 60% LTV) so employed a broker..... job done, super easy.
Good luck
