Major works: Council want £12,500. How best to borrow?

tygr

I have owned an ex LA flat for 9 years and this year the long anticipated major works were completed. The bill is £12,478.91.

I had planned to pay it over 36 months interest free offered by the Council from my mortgage reserve account, paying money into the mortgage account to pay off the debt as often as I could.

However, I let the property in the last couple of weeks and have just realised that the mortgage reserve will be capped as a result and that the Council don't offer the 36 month option if the property is sublet.

I need a new plan!

I have never had a loan other than student loans and I am reluctant to take one out but this might be my only option. Please can anyone offer any advice? Or can you see a better way? Woolwich have already said they will not lend more money when a property has been let, even though there is 60% equity in the property.

Thanks

jonesMUFCforever

Why would (presumably) the council do work on a privately owned flat?
If you are subletting do you have another property you could borrow against?

[Deleted User]

if the flat is part of a block where some are private and some are LA owned then they do the work regardless and you have to pay your share.
OP looks like a personal loan will be your only option.

tygr

Hi guys

Yes, it's part of an estate so the Council own the freehold and can charge back for repairs. I wouldn't have spent the money by choice and the works aren't worth £12,500 but that's another story...

The mortgage reserve will be capped at £1000 over the current balance so I'm considering withdrawing the money from the reserve this evening as the man on the phone said the cap isn't in place yet. I need to do some calculations to compare interest rates. No idea how much the interest is on the reserve tbh.

jonesMUFCforever

What IF you can't pay?
What is the worst thing that can happen?
They put a charge on the flat to be redeemed when you sell.

tygr

That's right and I possibly will sell quite soon. I've moved to a new area and am renting here, while I work out my longer term plans.

Can't work out if that works in my favour or against (selling soonish that is). Probably it's good as interest won't rack up quickly.

Reserve interest rate is SVR, which is 4.99%, which is better than a loan rate but possibly not what the Council will offer me. Need to call them first thing.

Presumably if I withdraw money from my mortgage reserve, fix the cap at a higher amount, I can then pay it back in and only lose a few days' interest and go back to plan A?