Catch 22

blueberrypie

So have you heard enough times yet that borrowing more in the hope that it will add enough value to get you to 80% LTV and in the hope that it won't affect your chances of getting a mortgage for that 80% probably isn't a good plan? :-)

Better plan: you reckon you'll owe £220k on your mortgage by April, and you say you can pay the extra £1k on your mortgage easily. So start doing that *now*. If you can manage more, pay more. Even if you only manage the £1k, by April you'll owe £213k instead (which brings you to just over 85% LTV), and if you do it for a few more months, you'll have brought your mortgage to under £200k - which, assuming your house-value stays the same, will get you to that 80% you want. You still haven't said what rate your mortgage goes onto in April - if it goes onto a tracker, you might find yourself with several hundred *more* extra each month that you can *also* overpay - getting to that 80% LTV even faster, and you'll have the added benefits of less debt and a far better chance of getting a better mortgage.

andys15

blueberrypie wrote: »

So have you heard enough times yet that borrowing more in the hope that it will add enough value to get you to 80% LTV and in the hope that it won't affect your chances of getting a mortgage for that 80% probably isn't a good plan? :-)

Better plan: you reckon you'll owe £220k on your mortgage by April, and you say you can pay the extra £1k on your mortgage easily. So start doing that *now*. If you can manage more, pay more. Even if you only manage the £1k, by April you'll owe £213k instead (which brings you to just over 85% LTV), and if you do it for a few more months, you'll have brought your mortgage to under £200k - which, assuming your house-value stays the same, will get you to that 80% you want. You still haven't said what rate your mortgage goes onto in April - if it goes onto a tracker, you might find yourself with several hundred *more* extra each month that you can *also* overpay - getting to that 80% LTV even faster, and you'll have the added benefits of less debt and a far better chance of getting a better mortgage.

I haven't got £1000 to pay now as I am paying debt which will finish in April. My rate is currently 5.34% and it will revert to SVR which is 4.99%, and I wont be staying on. Its not a question of will I get the loan, I am getting the loan for the house improvements. The question which is the catch 22, shall I get loan now and maybe harm my chances of remortaging but add value to my house in the hope I can get a better deal(rememebr I want to reduce my £218000 mortgage from 27 years to 10 years so every quarter percent is going to count.) Or do I wait for Apr, like as I have said my debt will of already reduced, but I cannot get a decent LTV.
You cannot give the same advice on here to the same people as we all have different situations. Already this morning I am reading about how borrowing is going to get harder so no doubt more expensive. I am a high earner in a safe job and it is affordable. Like I keep saying. DEBT is NOT bad aslong as it is serviceable. I am looking in the long run to actually save a lot of interest.

Any mortgage advisor out there? Would my figures add up? Would I struggle on our income to carry that much debt and get a remortgage?

redb_2

how will a drive by valuation see your sparkling new kitchen ? they wont and it wont add value to your house - might make it easier to sell at the selling price - but it wont add value

get rid of some of the debt first

andys15

redb wrote: »

how will a drive by valuation see your sparkling new kitchen ? they wont and it wont add value to your house - might make it easier to sell at the selling price - but it wont add value

get rid of some of the debt first

Definitely red, and that is something else I have considered, although I know that I can actually query a valuation and put a case in point, or indeed pay for an internal valuation. Like I say, I am not selling , so the home improvements is not an investment. So if £25k can add £10k to the valuation it gives me a few more per cent LTV.

TrickyDicky

As a recent purchaser (bought 4 months ago) I can say that for me and the better half, the kitchen/bathroom didnt make a lot of difference to what we would pay for a house. It was more important for us to find a nice house in a nice location, because we knew we could rip the kitchen/bathroom out ourselves to our own taste. Your tastes will be different from other people's, and will not add anywhere near what you paid for it.

If you spend £10k on a kitchen, I cannot see it adding more than £2k on what someone would be willing to pay for the house.

As for your £25k adding £10k to your house comment, the fact you've just gone £25k more in debt (when you are already heavily in debt) is more likely a mortgage company is going to reject your application, rather than a couple of % points on your LTV.

Please pay your debts first. It will make any application easier!

andys15

TrickyDicky wrote: »

As a recent purchaser (bought 4 months ago) I can say that for me and the better half, the kitchen/bathroom didnt make a lot of difference to what we would pay for a house. It was more important for us to find a nice house in a nice location, because we knew we could rip the kitchen/bathroom out ourselves to our own taste. Your tastes will be different from other people's, and will not add anywhere near what you paid for it.

If you spend £10k on a kitchen, I cannot see it adding more than £2k on what someone would be willing to pay for the house.

As for your £25k adding £10k to your house comment, the fact you've just gone £25k more in debt (when you are already heavily in debt) is more likely a mortgage company is going to reject your application, rather than a couple of % points on your LTV.


Please pay your debts first. It will make any application easier!

Yes but I am not interested in what someone is willing to pay for the house I just want to know what a valuer will value it at, and whether the home improvements will add to it. I am not selling the house. I am getting the home improvements for our lifestyle, the question was wether to do it now, or wait until my remortgage is in place. I have spoken to 3 brokers now and basically with the debt in April if I get a new loan before Xmas, they will knock £10000 of our joint income, which will make joint income £87000, we need a £218000 mortgage which is 2.5 times our joint income. All 3 have said we would not struggle with any bank to get a remortgage.

This is also an interesting figure. At the moment I have roughly 88% LTV which mean come April I can only get a 90% mortgage. Repayment for a 10yr mortgage is £2517, if I could get an 85% LTV mortgage the figure is £2275. The home improvement unsecured loan would over the life cost me an average of £83 per month. Getting a better LTV will save me £242.

andys15

Anyone on my side?

surreybased

Hi Andy,

I'm also agreeing with others. You have considerable debts (despite making headways, well done) and an LTV that's marginal so whatever way you look at it it's not the most attractive option for mortgage companies. The advice from people here is get your debt levels down and then consider an loan or look to get a mortgage with the ability to draw down the extra funds at a later stage.

Just so you know I'm in a similar position but we do have slightly higher levels of income, currently LTV of 50% and the mortgage amount is just under £200k but I am not keen on increasing our debt to get house improvements. We have minimum CC debts and am aiming for a 10-15 year mortgage term. I just feel that it would be tight for us to so am looking to pay down some of the mortgage/build up some savings as I think in this climate it's necessary to get a reserve fund.

Why the rush for the extension? Is waiting a year an option you've considered?

Fortheloveofmoney

Sorry but I agree with the others. I think you're going to struggle to convince people that borrowing more money would be a good idea when you already have nearly 40K worth of debt.

I know you say that jobs are secure but no-one knows what is around the corner.

Hubby and I used to earn similar to yourselves up until April 2009. Since then we've been faced with redundancy and a long term sickness issue which has meant that our take home pay has reduced by 58%. If I was still in the amount of debt I used to be in, this would be a major issue. I did however plan ahead for this and have reduced our outgoings so much that we haven't even had to touch the 6 months emergency money we have tucked away. In fact this money has now grown to nearly 2 years worth.

Getting rid of the debt was the best thing that ever happened to me as I now choose where my money goes. Seriously, concentrate on overpaying your debt first and then move on to overpaying the mortgage to achieve the 80% LTV you so desire.

blueberrypie

andys15 wrote: »

Anyone on my side?

There's a difference between being on your side and saying what you want to hear. Everybody who has posted in this thread is on your side - we're just not saying what you want to hear. Nobody is saying "get the loan now", because that's not a good idea. And nobody is saying "get the loan after you remortgage" because that's not a good idea either.

You don't *really* want people to be giving you poor advice, do you?

It's great that you're paying off your debts, but it really doesn't sound like you've had that "light-bulb moment" yet - the one that makes you realise that it's not just about being able to service the debt, it's about the freedom that not having the debt brings.