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Equity & transfer of loan to a new property
jimmy180
Posts: 3 Newbie
We recently took out a consolidation loan secured against our house. With a new child on the way, we now need to find a bigger house. As the loan is secured on the house, we have been advised that if we are to transfer the loan t the new property, we either have to go for a cheaper mortgage or sell our house for a lot more than it is worth, due to us only having approx 30k equity in the house. Does anyone know of any way around this problem ? It seems a rediculous rule as we our both now on really good money and we can afford the new home comfortably, but the equity in our current home is setting us back. Thanks in advance for your help. J
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Hi jimmy & welcome,
Perhaps I'm being a bit thick but I'm not at all clear from your post exactly what the problem is, could you post some details, figures or whatever that might clarify what advice you're asking for?
Is it that the outstanding mortgage, together with the consolidation loan [2nd charge?] are greater than the equity in your present property? Or am I completely missing the point.0 -
Hi Ian - We purchased the house at 97k, about 4 months ago we took out a consolidation loan for 35k. We are looking to buy a property for 170k. Our current house has been valued at 130k. A redemption figure from the loan company has come in at a staggering 50k (which includes payment protection) so with us only having 33k equity in the house, we are unable to transfer the loan to the new property as we would have 17k negative equity in the loan company's eyes. Does that make sense because I think I've just lost myself reading over that !!!!!! Thanks for your help anyway.0
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There are people that do loans greater than 100%, I think Northern Rock do and the Coventry. The question is do you redeem this loan and transfer everything to the mortgage or keep the loan to avoid the redemption penalty?
If you kept the loan going you would have less of a problem as your mortgage + loan would be about the same as your property value. Have you allowed for moving costs (including stamp duty)?I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Hi. Are current Mortgage lender is Northern Rock. They offered to take over the consolidation loan and even managed to bring the monthly out going down. This was when we thought that we only owed approx 35k on the loan. We didnt take into consideration the payment protection came to 12k over the term of the loan, hence the 50k redemption figure. This is where Northern rock couldnt match the offer based on the equity in the house. All moving costs have been accounted for. Thanks.0
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jimmy180 wrote:Hi. Are current Mortgage lender is Northern Rock. They offered to take over the consolidation loan and even managed to bring the monthly out going down. This was when we thought that we only owed approx 35k on the loan. We didnt take into consideration the payment protection came to 12k over the term of the loan, hence the 50k redemption figure. This is where Northern rock couldnt match the offer based on the equity in the house. All moving costs have been accounted for. Thanks.
is there any way you can cancel the payment protection? it sounds incredibly expensive.0 -
Almost everyone on the Debt Free Wannabe forum would tell you to ditch the payment protection insurance.A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
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It's a recession when your neighbour loses his job; it's a depression when you lose yours.0
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