Releasing equity can anyone help please

NML

Please can anyone suggest ways to deal with my situation

I have a house which is worth £285K and the outstanding balanced is £143K. I have gone to my exsiting mortgage company this morning to try to release £25K as my circumtances have changed completely since taking the mortgage out. They have refused the £25K release as they wanted me to set up a new mortgage for the £25K and will not let me tag this on to my exisiting mortgage and we have failed on affordability in their eyes even though we know we can pay the extra back. We have thought about getting our mortgage moved to a different company , can anyone suggest any ideas how we may be able to obtain the £25K through the equity in the property?

Thanks

getmore4less

Whats the salary

What have you told them the money is for?


It is normal for extra borrowings to be on a new current deal.


Whats your current deal rate and term any ERC's

ILW

You could sell the house and buy a cheaper one, that is the true meaning of equity release as opposed to just secured borrowing.

NML

~2 - thanks for your reply, Unfortunately there is only one salary involved as I had to stop working due to ill health, my husband is the sole provider on a self employed basis, he has been self employed for 14 years and thankfully has loads of work. His net profit is about £28K a year. They money is to clear some debts we have on interest free at the moment but the interest free runs out soon and we would like to pay the debt off and tag this on to our mortgage and possibly pay £200 a month for this, yes I told them what the money is for.

Our current rate is varible at 2.50% over base as we have just come off a 2 year tracker and the new tracker rates were not very good the end of this time. We have 19 years to go on the existing mortgage

NML

# 3 - yes I know what you mean but, no we don't want to move as we live in a lovely area and have a great house which has hopefully been our last move, life has turned out completely different from what we had planned when we moved as life has a habit of doing..... and we would like to clear out debts using the equity in the house if possible

ILW

Think that is the problem, you are currently at over 5 times income and most lenders are not prepared to go over that.

Cannon_Fodder

£143k plus additional £25k = £168k. £28k salary. = 6x salary.

Not going to happen. Especailly with rates about to rise. Last thing anyone should be doing, is increasing mortgage on an already borderline financial position, with rates about to rise. 'Lovely area' that you don't want to be repossessed from...

As for moving lender, £143k on its own is 5x salary, so you would need to be pretty lucky to find anyone to take that on.

Even if affordability rather than a salary multiple was used, the debt you are trying to clear would reduce your available disposable income.

If you have a spare £200 a month, just pay the CC direct. Get the debt down.

It doesn't really matter if you believe you can pay it back. You want their money, so they have to believe, and since the credit crunch are being less trusting.

Rightly so. Converting unsecured debt into secured debt is rarely a good idea.

NML

#6 - ah I see thanks for that, that explains it

NML

#7 thanks for your reply it really helps a lot

ILW

If OH is self employed and has loads of work, he could look at increasing his prices.

beecher2

NML wrote: »

# 3 - yes I know what you mean but, no we don't want to move as we live in a lovely area and have a great house which has hopefully been our last move, life has turned out completely different from what we had planned when we moved as life has a habit of doing..... and we would like to clear out debts using the equity in the house if possible

That would just be moving the debt onto your mortgage, not clearing them.
Go onto the Debt Free Wannabee forums for advice on how to clear the debts - if you post a Statement of Affairs people will help you to see where you could increase income, or cut expenditure.