Borrowing advice for newbie

[Rmjw84]

Hi, I’m a 39 year old who has rented his entire life. I don’t see owning my own home as a reality despite having always paid my rent on time. I’ve just never been in a position to save enough for a deposit and the goalposts keep moving. 
 

My wife and I are considering an extension on my parents property so we can live upstairs and they can move downstairs. 
 

I believe there is £50k left on the property and my old man has considered putting the mortgage in our joint names so we can remortgage and borrow the funds this way. (I will pay off the remaining mortgage and whatever we borrow). 

 

I am assuming before getting builders or architects involved the first point of call would be to approach a lender to see what the maximum we can borrow is? My dad however wants to talk to a builder, architect etc to get an approximate cost before speaking to lenders, but I worry if we go down that route the budget will keep stretching. I prefer the idea of having a finite amount I know I can play with rather than drawing a designing we can afford in reality. 
 

I would be so grateful for any pointers. Thanks in advance. 
 

[BotusBuild]

One of the problems with building stuff onto existing properties is not knowing of hidden surprises. When this happens, adjustments maybe necessary and may involve unforeseen cost. Sorry to be the harbinger of some possible doom. But you need to be aware of this upfront so you can plan accordingly.

 

You are going to have to take a balanced approach, and I think both you and your dad are right in wanting to approach the relevant people. You'll need to talk to both, find out what the lenders are prepared to lend, and what a builder is likely to charge. If you are handing it all over to someone to build and your funds are limited then you really need to consider a fixed price quote (Note: the builder will add a contingency figure into their quote as they will be taking on the risk to deliver the proposed extension).

 

Obviously, if you are able to do any work yourself/ves this may help to reduce the overall cost.

 

Whatever you do though, do not hand over money for work not completed.  For materials, maybe on delivery is OK, but pay for the "doing" in installments e.g. foundations complete, walls complete, roof and windows installed, first fix, second fix, completion and snagging.

 

Good luck. Don't be put off by what I've said, just be aware of it 🙂 

[Rmjw84]

Thanks for the balanced reply. Yeah, I appreciated there’s a good chance of unexpected costs along the way.
 

I just worry because my old man has history of getting carried away. We call him “The Quote King” because he loves to get quotes beyond his means and never follows through. 

 

My wife and I are trying to be very modest in our approach. We’ll get there in the end. Just trying to get some info so it doesn’t become him vs me.
 

I really appreciate the tips. Thanks a bunch. 

[joe90]

I agree with @BotusBuild you can’t spend what you can’t borrow/have. Savings can be made on things like kitchens,  bathrooms and lighting etc which can be replaced later on with better if funds allow. The structure/size will be fixed (and well insulated if you follow this forum,s mantra, which will save you future fuel costs forever). Good luck and keep us posted.

[SteamyTea]

17 hours ago, Rmjw84 said:

I’ve just never been in a position to save enough for a deposit and the goalposts keep moving. 

I don't want to come across of one of those old codgers that had it tough 45 years ago, but to get enough to raise a deposit, I took on a second job.

60 to 70 hour weeks are hard, and had little social life for a couple of years, but the extra deposit I raised made a huge difference as it gave me more choice.

I then had lodgers for a few years.

I only gambled once (they call it investment) with half my deposit, and that was buying some BT shares, that doubled in money.  The rest I kept in a simple, easy access, deposit account.

 

Saving cash is dull and very tough, but it does help.

[joe90]

2 hours ago, SteamyTea said:

I don't want to come across of one of those old codgers that had it tough 45 years ago,

And you tell the kids today and they worth believe you (Monty python).  Very true, and mortgage rates of 15% 🤷‍♂️ I do think it’s more difficult nowadays tho, so many caught in the rent trap. Mind you, so many people running around In new cars, not the rusty heaps like I had.

[Jilly]

Is the plot big enough to put a small annexe on or even a house in the garden? That would be my preferred route, for independence…What the others said about scraping by to get our first place was how we did it too. 

Is the option of your dad helping you to buy your own place by remortgaging, to get a deposit together? 

I would do that any day, compared to the stress of building and to keep independence (both families).

Unless you are considering taking care of your folks if they have age related issues?

Don’t forget there would be a big complication if your folks needed residential care and you are in their house and part own it. 

 

All the best.

[Blooda]

Important Questions.....

 

Do you have any siblings?

Have you taken tax advise?

Have you taken inheritance / will advise? 

Have you all lived under the same roof for a considerable amount of time before?

[Temp]

On 16/05/2024 at 12:23, Rmjw84 said:

I am assuming before getting builders or architects involved the first point of call would be to approach a lender to see what the maximum we can borrow is? My dad however wants to talk to a builder, architect etc to get an approximate cost before speaking to lenders,

 

Doesn't make much difference either way. Might as well do your bit/both at same time.

 

Joint ownership of property can be full of hidden issues. Be sure to get a solicitor involved to do the paperwork. Consider  what would happen if one of you dies or gets made redundant or you had a falling out and had to move out. How would you get your share out? It should define your share of any bills like council tax? Maintenance, insurance etc.

 

If you want to be able to sell it as two separate properties I believe that would need planning permission. Two lots of council tax etc.