Further Advance with very low LTV Ratio

ak23_2

Hi,

Really need some guidance here on applying for a further advance on my mortgage,

Currently have a LTV Ratio of only 19.8% (£260,000 property value with £48,000) remaining on the mortgage.

I'm looking to borrow an additional £50,000 bringing my total LTV Ratio to 40% which is well below the 80% they are willing to lend.

I have had the mortgage for ten years and never missed a single payment.

Also strengthened by an immaculate credit report, HOWEVER... I currently have £12k outstanding on a credit card.

The purpose of the additional borrowing is for Home Improvements, however I would look to pay off £12k of my credit card using the further advance... Would the current £12k balance affect my ability to gain a further advance?

Thanks for comments

Thrugelmir

Quite possibly. Lenders will be far more interested in the amount of unsecured debt you have than the excellence of your credit score.

£50k is a significant amount for home improvements. So detailed questions may be asked. Lenders are far tighter on the purposes of equity withdrawl.

ak23_2

I could potentially borrow some funds from a close family members for a short period of time and pay this credit card bill off, therefore will not have any liabilities against my name...

GMS

Why not apply on the basis of repaying the debt and home improvements?

What are the improvements? 38k is a lot for a new kitchen for instance but not for an extension.

You need to think about putting unsecured borrowings on to your mortgage. Is there no other way to repay the debt?

Thrugelmir

Lenders have seen the games people play a thousand times before.

You'd still need to borrow £50k to repay your family.

ak23_2

I was planning to write off £15k credit card through my equity release, if it were accepted. Unfortunately this is the only way for me to be able to do this, hindsight prevails in situations after they have happened.

My LTV Ratio is still fairly low even with the increase borrowing on my mortgage at around 40-42% LTV.

I would be paying off £15k credit card and using the rest for some renovations and building an en-suite bathroom within the house, however this is in the early stages as capital is needed to do this.

Thrugelmir

ak23 wrote: »

I was planning to write off £15k credit card through my equity release, i

Have you looked at converting this into an unsecured loan, at a cheaper rate of interest?

ak23_2

I have not, however would rather just release it on the equity of my property, as I've priced in the increased monthly payments of doing so and they are not an issue.

All my concern is, would Halifax release £50k for home improvements and would the £15k outstanding on a credit hamper my ability to do that?

I know if I get declined the first-time, it would really be difficult to re-apply, hence why I want to make sure the first-application is done properly.

Would paying off the £15k using family/friends money be beneficial?

Thrugelmir

Halifax offer home improvement loans up to £15k.

http://www.halifax.co.uk/loans/home%20improvement%20loan.asp

This not equity withdraw but a personal loan.

ak23_2

The route I want to pursue is further advance... I can afford the increased monthly sum and the LTV ratio is still below 50% which is good.

All I want to know is if the £15k credit card outstanding will hamper my application and is it better to pay it off quickly using funds from family/friends?

Thrugelmir

ak23 wrote: »

The route I want to pursue is further advance... I can afford the increased monthly sum and the LTV ratio is still below 50% which is good.

All I want to know is if the £15k credit card outstanding will hamper my application and is it better to pay it off quickly using funds from family/friends?

Sorry your not getting the answers you wish to hear. The link I've provided gives you information on the Halifax's Home Improvement loans. So the likely of the Halifax offering you a further advance of £50k for the purpose of home improvement seems most unlikely.

Your LTV has no bearing or relevance on the Halifax's lending policy or ability to meet the repayments.

Suggest you contact a broker who may be able to assist you finding a lender that is agreeable to releasing funds on remortgaging the property.