Stung by renovation costs

lady_lucan

I took out a 2 year mortgage product with Abbey for 83K which expires mid-Dec. I owe 78K, have a house now worth about 137K+, and have a number of unsecured debts for the renovation costs, which mean I want to add 45K onto the new loan. Trouble is, they aren't looking favourably at all on this additional borrowing and say that they would only lend me 85% at a very uncompetitive rate! I am fuming because I have added considerable value to a formerly ramshackle house at much effort and expense, and now can't recoup my costs!

Why is this, and how should I best remortgage/clear these debts?

herbiesjp

lady_lucan wrote:

I took out a 2 year mortgage product with Abbey for 83K which expires mid-Dec. I owe 78K, have a house now worth about 137K+, and have a number of unsecured debts for the renovation costs, which mean I want to add 45K onto the new loan. Trouble is, they aren't looking favourably at all on this additional borrowing and say that they would only lend me 85% at a very uncompetitive rate! I am fuming because I have added considerable value to a formerly ramshackle house at much effort and expense, and now can't recoup my costs!

Why is this, and how should I best remortgage/clear these debts?

Well if you current lender will nothelp you will have to look at a new lender.

You will need to find a lender that is happy with the 90% re-mortgage scenario, and that your income is sufficient to cover the new amount

HTH

rjm2k1

lady_lucan wrote:

I took out a 2 year mortgage product with Abbey for 83K which expires mid-Dec. I owe 78K, have a house now worth about 137K+, and have a number of unsecured debts for the renovation costs, which mean I want to add 45K onto the new loan. Trouble is, they aren't looking favourably at all on this additional borrowing and say that they would only lend me 85% at a very uncompetitive rate! I am fuming because I have added considerable value to a formerly ramshackle house at much effort and expense, and now can't recoup my costs!

Why is this, and how should I best remortgage/clear these debts?

Why fuming? surely you didn't think you were adding the value for the benefit of the lender? I'm confused about how you think you would be re-couping your costs by adding them to the mortgage, the only way to recoup them is to sell and pocket the increased equity, but of course you have no house then.

lady_lucan

By recoup I mean have a lender view the money I have spent as part of the house valuation, not as unrelated debt. I live in a regeneration area - it shouldn't be necessary to move in order to have a reasonable mortgage on a habitable property, otherwise there is no incentive for residents to improve their homes.

In any case, have had an adviser look at the situation, and the Skipton are looking good!

ataction

Well yes I see your point, but the arithmetic has to make sense, and I suppose the problem is that the house has just not increased enough in value relative to the investment on the renovations. It is a tough world.