Advice please! Secured Loan for Home Extension
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Villagepig76
Posts: 4 Newbie
in Loans
Hi all,
Looking for a little advice about secured loans (apologies for the huge back story
). We have worked hard over the last few years to clear 95% of our unsecured debt. Leaving a small, manageable amount still to be cleared (>£4k).
We have outgrown our house but would prefer to extend it rather than sell and move elsewhere. We remortgaged about 6 months ago and we are on a fixed rate until the end of 2019(ish). Our mortgage is for £222k and the house has been valued at £270k (82% LTV).
We have planning permission to extend, adding 2 bedrooms, a family bathroom and an en-suite. We believe (based on high level data of the surrounding area) that the top price for our area (to get a valuation after the work is done), is £385k.
The building work has been estimated to be £75k.
Our issue is not affordability (we are lucky to both work in reasonably well paid permanent positions), nor is it credit worthiness (thanks to 6 years of HARD graft to sort out our finances). The issue we face is that we don't have the LTV to take equity out of our current morgage.
The only option I am aware of, would be a secured loan since we don't have any access to other funds.
Unfortunately, the only advice I can find online is that these loans are not suitable for debt consolidation.
Does anyone have any advice/alternative options that I should consider?
Thanks in advance!
VP
Looking for a little advice about secured loans (apologies for the huge back story
). We have worked hard over the last few years to clear 95% of our unsecured debt. Leaving a small, manageable amount still to be cleared (>£4k).We have outgrown our house but would prefer to extend it rather than sell and move elsewhere. We remortgaged about 6 months ago and we are on a fixed rate until the end of 2019(ish). Our mortgage is for £222k and the house has been valued at £270k (82% LTV).
We have planning permission to extend, adding 2 bedrooms, a family bathroom and an en-suite. We believe (based on high level data of the surrounding area) that the top price for our area (to get a valuation after the work is done), is £385k.
The building work has been estimated to be £75k.
Our issue is not affordability (we are lucky to both work in reasonably well paid permanent positions), nor is it credit worthiness (thanks to 6 years of HARD graft to sort out our finances). The issue we face is that we don't have the LTV to take equity out of our current morgage.
The only option I am aware of, would be a secured loan since we don't have any access to other funds.
Unfortunately, the only advice I can find online is that these loans are not suitable for debt consolidation.
Does anyone have any advice/alternative options that I should consider?
Thanks in advance!
VP
0
Comments
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LTV is there for a reason - to protect the lender in the event of you not repaying and a downturn in house prices.
I would firstly go to my existing lender. They will lend (or not) based on their figures about future valuation.
Any lender will require a margin should they lend - this might be a problem unless you can fund some of this yourself - any savings?0 -
You'll need to build up further equity to fund £75k of building works. Lenders won't advance money on future value. Now you've resolved your debt issues (almost). Overpaying your mortgage is the next step.0
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OP You refer to a secured loan. You cannot secure it on the house as you do not have the equity in it, so my question is what are you planning to secure the loan on? Do you have other assets?0
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