Need help with mortgage or loan

go_granddad

Hi everyone, burning midnight oil and need help .
We have a house in UK worth £130k with a £45k mortgage. We also have a holiday house in France worth £200k owned outright.
We are retired with a joint income of £23k
We want to do some work on our UK house and need £13k, we want to borrow this and pay interest only, the capital will be repaid in 5-7 years when we sell our house in France.
We went to our existing mortgage provider and they will only let us have £8k and it is on a repayment mortgage, not what we want. They will not let us use our house in France to repay the capital!
This seems crazy as both mortgages come to less than half our UK house so no risk.
So what is the best way forward? We don't want to change the existing £45k mortgage as it is on a great deal, just want the £13k extra at minimum cost.

kingstreet

If you won't change your current mortgage, the only option is a loan - either secured or unsecured.

The former will be more likely to offer an interest-only option.

go_granddad

Thanks, have been looking but all the loans seem to require repayments of capital and interest, we want interest only, any exist?
Plus low fee and reasonable interest, it just seems crazy that our existing provider won't do it.

Thrugelmir

Majority of lenders will require either the mortgage to be repayment or a suitable investment vehicle to be put in place.

A property abroad provides no security for a UK lender.

Not merely a question of risk for the lender. Other factors come into the equation.

knightstyle

When you say majority of lenders you imply that some don't require this, any ideas who these lenders are?

kingstreet

What a mortgage lender will or won't do isn't relevant. If you won't move your mortgage, your only option is a secured loan. I suggest you contact a secured loan broker to see what options exist.

It's not my market, I'm afraid, so I can't tell you how many options there might be for interest-only secured loans.

go_granddad

Will look at that but as I said I cannot find a interest only repayment loan. What are our options on getting a mortgage to cover the whole £58k, interest only, secured on our UK house and to be repaid when we sell our French house? Existing provider said no!

kingstreet

go_granddad wrote: »

Will look at that but as I said I cannot find a interest only repayment loan. What are our options on getting a mortgage to cover the whole £58k, interest only, secured on our UK house and to be repaid when we sell our French house? Existing provider said no!

For some reason, your existing lender said no to the additional borrowing. You weren't moving all your mortgage to them and their rules may well be different in such circumstances.

A remortgage like this should be relatively straightforward. As your mortgage will be well under 75%, sale of a second property should be an acceptable repayment plan.

I take it you have the necessary income and credit worthiness.

Start shopping around or find yourself a broker - whole market or independent would be the best choice.

I'd carry on looking for a secured loan too. It'll give you something to compare the mortgage with when you find the right deal.

go_granddad

Thanks again, like you I thought it would be quite easy but none of the companies I have contacted will give interest only loan or mortgage with repayment of capital when we sell our French house! Makes me scream.

kingstreet

I just had a look at Nationwide's lending criteria and it reads;-

Mortgage Repayment Vehicles

As part of our commitment to responsible lending, we need to know how your clients intend to repay any interest only borrowing. We will accept the following repayment vehicles:

stocks and shares ISA including one previously known as a PEP
endowment policy
pension plan
sale of second property
sale of main residence
UK FTSE listed securities
unit and investment trusts
capital from Trust funds
Premium Bonds
sale of foreign holiday home

Unfortunately, there will be some cases where Nationwide cannot accept your client's repayment method as it will not meet our responsible lending requirements.

Sale of property to repay capital is subject to restrictions. If the property is your client's main residence, there must be £150,000 equity and borrowing must not exceed 66% of the value of the property.

The sale of a main residence or sale of a second property cannot be used in conjunction with any other type of repayment vehicle.

If the repayment vehicle is a second property, equity in that property must be at least 120% of the new mortgage that it is intended to cover. The property must be owned solely by your client(s).

go_granddad

kingstreet you must be physic, Nationwide is the existing provider and they wouldn't allow us to use the French house to repay the loan!
I will definitely ring them on Monday!