To Move or Not To Move

CASE STUDY – TO MOVE OR NOT TO MOVE?

…THAT IS THE QUESTION…

CLIENTS’ SITUATION
a puzzled manOur clients were in their early 40s, with joint earnings of £35,000 per year. They had two young daughters and had lived in their semi-detached home since 2001.

Their property was valued at £ 170,000 with a mortgage of £60,000 outstanding. They had 12 years remaining for which they were paying £532 per month and were on their lender’s standard variable rate of 4.00%.

With a growing family our clients needed a little bit more space and were left with two choices – extend or move.

They already had discussed an extension with their chosen builder and had plans drawn up and approved. The cost for the two storey extension was £43,000, but this was just for the shell and did not include new kitchen units, appliances and a new bathroom.

If our clients chose the extension option they were looking to raise £55,000 to pay for the building and additional fixtures and fittings.

Our clients preferred a five year fixed mortgage with flexibility to overpay without penalty.

THE PROBLEM
As noted one of the options was to move to a bigger property but our clients had looked around the locality and could not find a property they liked within their budget of £250,000.

After taking into consideration the costs of moving, which would be around £7,500 (estate agent fees of say £ 3,200, Stamp Duty £2,500 and solicitors costs for buying and selling £1,800) our clients decided the extension option was the way forward for them.

Our clients’ monthly budget was £650 per month for mortgage payments.

THE SOLUTION
building an extension to a houseAfter researching the market Manchester Mortgages found a lender offering a competitive five year fixed rate at 2.74% with no lender arrangement fees, free valuation and free legal service along with 10% per annum capital repayments without penalty.

As Manchester Mortgages advisors have years of experience in not only giving mortgage advice but also in property renovation we recommended that clients increase the mortgage to £127,500 to provide additional funds to ensure that if any unexpected costs arose there would be monies readily available. As the builder’s bill did not include the kitchen and bathroom fittings the extra money would allow the clients to have the choice of fittings rather than having to choose within a budget.

However, by choosing a lender that offers capital repayments of up to 10% per annum without penalty if all went to plan and the build came in on budget clients would have the option to repay up to £12,700 back to the mortgage.

The mortgage cost at £127,500 was £582 per month as clients preferred to take mortgage over 25 years, but again they have the option to overpay by way of lump sum or monthly payments or to reduce the term of the mortgage in the future. Find out more about our homemovers / house extension mortgages.

CONCLUSION
Our clients now have the mortgage in place for their extension with the added comfort of additional funds available if required. They will be able to choose the kitchen and bathroom of their dreams along with the flexibility to repay any surplus monies back to the mortgage without penalty should they choose to.

SUMMARY
Mortgages usually have some sort of twist to them – this one was pretty straight forward but because of our own experiences in renovating properties we at Manchester Mortgages know that unforeseen problems with buildings can increase the funds required and we therefore look to build in flexibility within your mortgage.

We look forward to receiving a call from our clients to invite us over for a cup of tea and a tour of the extension when completed.

Contact Manchester Mortgages on 0161 706 0242 to discuss your requirements or complete and send the Contact Us Form so that we can solve your mortgage problems