Home extensions, a broker’s opportunity…
“Home extensions are a financing opportunity for brokers as well as saving considerable and unrecoverable expenses for homeowners”, says Brian Rubins, Director of Alternative Bridging Corporation (Alternative).
Rubins continues, “Although the sales market has become lethargic there is a shortage of available stock and a dearth of new houses being constructed. Secondly, because of this shortage, except in Prime Central London, it still mainly remains a “sellers’ market”. Add to this, moving schools and the emotion and effort resulting from a move and there are three reasons to improve an existing home and to be a “remainer”.
“Another reason is totally financial with agents, legal fees, stamp duty and removal costs being costs for which there are no tangible benefits – so it is easy to see that a home extension could be better value.”
For these reasons, builders are busy adding rooms over garages, undertaking loft extensions and digging out basements. Home improvements are big business but how are they paid for? There is a top-up of the existing home loan or if the terms or pricing of the existing loan precludes this, refinance or a secured second charge from another lender are both viable options.
Rubins concludes, “However, often timing causes a problem. Maybe the new loan is not available until the work is completed, then bridging finance can fill the gap. This may involve repaying the existing mortgage or borrowing secured by second charge. Depending on the equity in the property, the bridging loan can be advanced in full or released in tranches as work progresses and interest accrued, all repaid from the new loan.”