Equity on house??

qwertyqwerty

Hi i was just wondering before I contact my bank, what is the deal with equity on a house and whether banks in this climate are allowing people to raise money through equity on the house?

I currently have an interest only mortage, and am in a situation where i need to raise 30k. i have a mortgage for 105k, with the house being valued at around 145-150k. if i was to approach my bank, would they consider allowing me to raise the mortgage to 135k? I am very comfortably making my monthly payments, and could contiune to do so, even with a significant rise in the monthly payments. i was just wondering what peoples thoughts were on this, and the best way to approach it?

Thanks,

yelf

it shouldnt be a problem, though you probably wont get a good rate due to the ltv

benjo

Im not a mortgage advisor so I dont know how many deals are out there, but assuming your house is worth 145k, if you borrow upto 135k you will have a ltv of 93% and that is pretty close to the threshold for lending, since I cant find any deals above 95% and their rates aint nice.

Goodluck

opinions4u

qwertyqwerty wrote: »

Hi i was just wondering before I contact my bank, what is the deal with equity on a house and whether banks in this climate are allowing people to raise money through equity on the house?

I currently have an interest only mortage, and am in a situation where i need to raise 30k. i have a mortgage for 105k, with the house being valued at around 145-150k. if i was to approach my bank, would they consider allowing me to raise the mortgage to 135k? I am very comfortably making my monthly payments, and could contiune to do so, even with a significant rise in the monthly payments. i was just wondering what peoples thoughts were on this, and the best way to approach it?

I think it's going to be a tough ask for any lender. It would help if you posted who your lender is and what rate you are currently paying on your mortgage, together with any penalties payable should you move to a new lender.

If the valuation comes in a £145k you're talking about a 93% LTV which just won't happen. Many are restricting themselves to 85%. Take a look at www.moneysupermarket.com/mortgages and see if there are any deals you can find for remortgage at a lower amount.

You may well need to borrow less.

yelf wrote: »

it shouldnt be a problem, though you probably wont get a good rate due to the ltv

I admire your optmism, but this has "problem" written all over it.

nikkster_2

This week I rang our bank to ask about raising funds on a house we own - they were happy to agree to advance me the amount which would take us to 75% value, the max allowed for BTL which ours is. The rate was fine and they allowed us to stay on interest only. Is this helpful?

Ian_W

nikkster wrote: »

Is this helpful?

Best will in the world I can't see how it would be. OP already owes almost 75% LTV and the £30K extra would take that to 90% or more and as I read it on a residential mortgage. Sorry, no cigar!

What does the OP need the additional borrowing for? If it is for debt consolidation then any lender would be barking to agree. ATM they have a mortgage secured against a property which if a default occurs can be sold, the debt and costs recovered with probably a bit left over. If they lend the extra £30K and allow what is currently unsecured debt to be secured against the property - they probably (almost certainly) make a loss if they have to repo.

OP what do you need the extra money for? If it is something discretionary like home improvements or a car, look elsewhere to fund it. If it is debt, look at other ways to tackle it - plenty of help on DFW board.

Thrugelmir

The fact that your mortgage is already interest only won't go in your favour. As I assume the additional borrowing will be on this basis as well.

You will need to explain what the funds are required for.

Personally I would say you are unlikely to be successful. Suggest you review your financial affairs and make some significant changes.

qwertyqwerty

Hi thanks for all the replies so far. Right to answer the questions, my mortgage is currently with the halifax, it is interest only, and I am not currently tied down to a deal, I am on the base rate.

The money is for me to buy into a business, I thought i would try this possibility first rather than go for the business loan. Other than the mortgage I am completely debt free.

Thanks,

opinions4u

qwertyqwerty wrote: »

Hi thanks for all the replies so far. Right to answer the questions, my mortgage is currently with the halifax, it is interest only, and I am not currently tied down to a deal, I am on the base rate.

It looks like they limit total lending to 80%.

http://www.halifax.co.uk/mortgages/additionalborrowing.asp

The money is for me to buy into a business, I thought i would try this possibility first rather than go for the business loan.

I would be very surprised if they would lend you money on your residential mortgage for a business anyway.

EDIT: Found this on Google for purpose of loan.

Business purpose (restriction - not for injection of capital)
Consumer goods (restriction - not for holidays)
Debt consolidation
Gift to relative
Home improvements (shared ownership included)
Investment purpose (restriction - not for currency speculation)
Purchase freehold - (conveyancer required)
Purchase additional land adjacent to property (conveyancer required)
Purchase extension to lease - (conveyancer required)
Purchase additional share (shared ownership)
Repay subsequent charge (refer to subsequent charge section before proceeding)
Repairs
Second home loan (restriction - not for purchase of a time share)