advice needed on financing a new roof please

nelehrenrut

My partner and I own a house which is converted into two flats. It was our home but four years ago we remortgaged to buy our current home and have since been renting it out.

We have known for a while that the roof would need replacing but haven't been in a position to save as all profit from the flats has been used to renovate our new house.

We have had to make a few repairs to the roof recently and have decided to bite the bullet and get it replaced.

Currently we could afford to pay about £500 a month towards a loan but this is dependent on interest rates being low as the mortgages for the flats are on the SVR, the fixed deals having ended and us in no hurry to re-mortgage with rates as they are currently.

We aren't sure whether to re-mortgage or to get a loan. Ideally a loan would need to be flexible. We estimate borrowing about 15 - 20K as we would get all the other exterior work such as soffits, guttering etc done at the same time.

Are there any other ways in which someone can suggest we finance this project as we are unsure of the best way to proceed?

Thanks for reading,
Beth

nelehrenrut

anybody??

we need a loan and can afford to pay quite a large monthly amount now but need it to be flexible for when interest rates rise again and we are not making so much profit from the rentals.

All suggestions welcomed!

Thanks for reading

Dabooka

How big is the house? Seriously, that's a HUGE roof.

Do you have any equity in the flats you're renting out, some you could tap into if you do need to remortgage? I think you'll struggle to get a loan that size in the current market unless it's secured anyway, hence thinking down the mortgae route (even a smaller second one that allows you to pay off extra). HTH

paulmcerlean

Dabooka wrote: »

How big is the house? Seriously, that's a HUGE roof.

Do you have any equity in the flats you're renting out, some you could tap into if you do need to remortgage? I think you'll struggle to get a loan that size in the current market unless it's secured anyway, hence thinking down the mortgae route (even a smaller second one that allows you to pay off extra). HTH

A 15K loan is perfectly obtainable unsecured provided you have a good strong credit rating and a good income to credit ratio. Outside of trying your bank, you should try the likes of Tesco Loans who provide good rates at the amounts you require.

However your bank may be able to provide you with a very good APR if you have given them good custom over the years.

Dabooka

paulmcerlean wrote: »

A 15K loan is perfectly obtainable unsecured provided you have a good strong credit rating and a good income to credit ratio. Outside of trying your bank, you should try the likes of Tesco Loans who provide good rates at the amounts you require.

However your bank may be able to provide you with a very good APR if you have given them good custom over the years.

I take it all back, apparently it's that simple. Go the bank and get the very good APR they'll offer.

Oh, do come back and let us know how you get on.

nelehrenrut

Thanks so much for the replies....

The roof IS huge! The house was originally 3 recep, 4 double bed detached, plus the attic has been converted with a dormer to the side.

The first chap we had out to quote yesterday reckoned £7K for the main roof alone, so with the dormer needing re-roofing and tiling to the side elevations, plus all the plastics and the scaffolding etc I still think we're looking at about £12k.

We want to avoid re-mortgaging if poss as we'll obviously pay more in the long run and it's now we have the surplus monthly income. Each flat is mortgaged at £137K and possibly only worth £170 - 180k and we need to think about keeping the LTV as low as poss for when we come to re-mortgage for the original amount.

A loan would only really work if flexible as, like I say, we would struggle to pay what we can afford now when interest rates rise, but don't want to set the repayment too low that it would take years to pay off.

Our other option we are considering is to get the roof patched up again for now for a few thousand and to save cash monthly towards the new roof, hoping that interest rates stay low long enough to raise the capital needed.

Dabooka

nelehrenrut wrote: »

Thanks so much for the replies....

The roof IS huge! The house was originally 3 recep, 4 double bed detached, plus the attic has been converted with a dormer to the side.

The first chap we had out to quote yesterday reckoned £7K for the main roof alone, so with the dormer needing re-roofing and tiling to the side elevations, plus all the plastics and the scaffolding etc I still think we're looking at about £12k.

We want to avoid re-mortgaging if poss as we'll obviously pay more in the long run and it's now we have the surplus monthly income. Each flat is mortgaged at £137K and possibly only worth £170 - 180k and we need to think about keeping the LTV as low as poss for when we come to re-mortgage for the original amount.

A loan would only really work if flexible as, like I say, we would struggle to pay what we can afford now when interest rates rise, but don't want to set the repayment too low that it would take years to pay off.

Our other option we are considering is to get the roof patched up again for now for a few thousand and to save cash monthly towards the new roof, hoping that interest rates stay low long enough to raise the capital needed.

I understand fully about wanting to protect the LTV, we have exactly the same situation with our 2nd property and try and save up the surplus for improvements (although it's somewhat smaller than yours and nothing on that scale expense; yet!).

Once you've a better idea of how much you need to borrow (there's a big difference between 12k - 20k!) shop around for a flexible loan, I'd imagine the APRs might be higher, but this should be offset by clearing it quicker. I still think that if you're going to show the income of the rental property as means to finance it they might want security.

Just my tuppence worth. Best of luck, and post back your progress.

nelehrenrut

OK, so quick update.....

Two quotes have come in so far. One at £16,972 for all the works, the other at £11,585.

We saw our financial advisor last night and he made an un-expected discovery. Just under two years ago, when the mortgage market was starting to get crazy but before interest rates fell dramatically, we fixed the mortgage on our home (not the property we are considering the re-roof on). The rate we are on now is 6.54%

Because we have a high LTV on our home and there are now some better mortgage deals around, we could make a massive monthly saving if we re-mortgage, even swallowing the redemption penalty of around £4K. We can now get a rate of 3.09%

We could also add an extra £10K to finance the roof without adding too much to the monthly repayment.

So now the question is this: do we

a) take the extra money but then overpay upto the figure we are currently paying to get the extra borrowing cleared off the mortgage debt, or

b) not add the extra £10K to our mortgage but instead use the savings we will make of around £600 per month to pay off a loan in addition to the £500 per month that we can pay from the profit from the rental property? (Also, if we get a business loan we can offset the loan against the tax on our earnings from the property)

With option b we would still have to set the loan amount low enough to know that we could cover the repayments if interest rates rise and the mortgages on the rental property increase.

Again, any suggestions welcome, thanks for reading!