Remortgaging with Additional Borrowing in 2025: A Family's Journey to Creating More Space

With interest rates stabilising in 2025, many homeowners are approaching the end of their fixed-rate periods and exploring their remortgage options.

For families like Ed and Laura, remortgaging presents an opportunity not just to secure a new follow-on rate, but to fund home improvements that accommodate their growing family.

Let's explore how Ed and Laura plan to navigate their remortgage while borrowing extra for their loft conversion project.

Ed and Laura's Story

Ed and Laura are both 33 and bought their home, a 2-bed end of terrace house in Whitstable, Kent 5 years ago for ￡290,000. They’ve since had two children, Holly and Jake, now aged 4 and 1 respectively.

Whilst they’re running out of space fast, they love the area and get on very well with their neighbours.

Their current 5-year fixed rate mortgage ends on June 30th, 2025.

They're looking to remortgage their home and borrow an additional ￡50,000 to convert their loft, transforming their 2-bedroom property into a comfortable 4-bedroom family home.

Their property is currently valued at ￡360,000, and they're looking to borrow ￡300,000 in total, representing an 83% loan-to-value ratio.

Breaking Down the Costs

Remortgage Costs

• Legal Fees - Many lenders offer free standard legal services for remortgages
• Valuation Fee - Most lenders provide a basic valuation free of charge
• Mortgage Broker Fee - ￡199 for expert advice, support and guidance throughout the process
• Lender Arrangement Fee - ￡999, which they intend to add to the loan as they’ll need every penny available to complete the loft conversion. They understand they will pay interest on the fee.
• Early Repayment Charge (ERC) - None, as they're remortgaging at the end of their fixed term when there are no penalties for redemption of the mortgage.

Loft Conversion Budgeted Costs

• Building Work and Materials - ￡45,000
• Architect Fees - ￡2,000
• Building Regulations and Planning Permission - ￡1,000
• Contingency Fund - ￡2,000

Mortgage Options

After discussing their preferences and reviewing their ￡1,700 monthly budget, their mortgage broker recommended a 5-year fixed rate mortgage with X Bank:

5-Year Fixed Rate at 4.84%

• Loan Amount: ￡300,000
• Term: 35 years
• Monthly Payment: ￡1,484
• Arrangement Fee: ￡999
• Free Valuation & Free Legal Fees

This option provides Ed and Laura with:

• Long-term payment stability for their family budget
• Protection against potential rate increases
• Time to complete their loft conversion and benefit from the added value
• Monthly payments well within their budget, leaving room for to review and upgrade their protection policies.

Protecting Their Family

With a larger mortgage balance, a longer mortgage term and young children (they didn’t have when buying their home 5 years ago) to consider, protection is crucial:

• Life Insurance - Ensures the mortgage can be repaid if either Ed or Laura passes away. It could also provide an income for the household to replace Ed / Laura's income until Jake and Holly reach an age where they're no longer financially dependent.
• Income Protection - Provides a regular income if Ed or Laura cannot work due to illness or injury beyond the minimal sick pay offered by their employers.
• Critical Illness Cover - Offers a tax-free lump sum if either Ed or Laura are diagnosed with specified serious illnesses. It also has children’s cover built-in, meaning they would receive a lump sum if Jake or Holly suffered a critical illness, taking the pressure off at a terrible time.
• Buildings and Contents Insurance - Required by the lender and protects both their home and possessions.

Following the 10-15% rule for protection costs, Ed and Laura should budget ￡150-220 per month for their protection policies, which fits with their ￡1,700 overall monthly budget

Next Steps

Ed and Laura are ready to:

1. Finalise their loft conversion plans and obtain necessary permissions
2. Work with their mortgage broker to submit their remortgage application
3. Set up appropriate protection policies
4. Begin planning their loft conversion project

Planning Your Remortgage?

If you're approaching the end of your fixed rate in 2025:

• Start exploring options 6 months before your current deal ends
• Consider whether additional borrowing could help achieve your goals. You may not have to move home to obtain your “Dream Home!”
• Seek expert advice to understand all available options
• Think carefully about protecting your family's financial future

Remember, while additional borrowing can fund valuable home improvements, it's crucial to ensure the increased monthly payments remain affordable both now and in the future.

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Your home may be repossessed if you don't keep up with your mortgage payments.

This article doesn’t constitute advice - your situation and requirements are unique and therefore you should seek expert advice based on your own individual circumstances.

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About Me

I'm Mark Humphrey, founder and Advisor at MHC Mortgage & Protection Ltd, a mortgage broker firm based in Whitstable and helping people buy their homes across the UK.

I've worked in Mortgages for over 20 years and am passionate about making the mortgage and moving process as simple and stress-free as possible.

Buying your home is a BIG DEAL and with a bit more understanding and help along the way - it really can be such a positive experience and not the stressful and anxious time that so many people dread!

Please get in touch if you have any questions or I can be of any help at all - [email protected] | 01227 807087

MHC Mortgage & Protection Ltd is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.

Registered in England and Wales - 12067840 – Registered address – 13 Aurum Close, Whitstable, Kent. CT5 3FN

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