Should I release some equity?

hazzie123

It`s probably been asked before but I`m in two minds whether to try and release some equity in my house.
I owe £37k on the current mortgage but my house is roughly worth £90k

So I have roughly £40k just sitting here,I would like to get £18k released so I can pay off my £18k bank loan.This bank loan would be paid off in 5 years,but I know if I got the equity it I would be paying it back for the life of the mortgage which is about 20 years.But the payments would vastly be reduced.I currently pay £365 a month on the bank loan,which is more than my actual mortgage.

Would I have to have a credit check done to release the money? My credit rating is classed as "fair" at the moment.

I`m not sure whether to just keep plodding on as I am for the next 5 years or to go for the equity release.

Any advice??

dunstonh

Unless you are aged over 60 (some may go to 55) then you cannot do equity release. What you are asking for is an increase in your mortgage. Often called a further advance.

Obviously, if you move a 5 year loan into a 20 year mortgage, you are going to pay an awful lot more back over the term. However, if you accept that, then you just go to the mortgage lender and tell them you want to apply for a further advance on the mortgage. It will be treated as a new loan and credit checks will be done.

jaype

Bear in mind that like other investments, house prices can go up or down, and at the moment they are as high as they have ever been, with many people expecing them to go down. Think carefully - how old are you, when do you retire, what can you really afford each month to pay off the debt and mortgage quickly? Remember, unless you sell up and downsize or similar, that 40k 'just sitting there' is only there on paper. In five years' time, the price situation could be much different... If it would make life quality much better for you and you can afford it then go ahead.

hazzie123

Thanks for the advice but I have decided not to go with the further advance on the mortgage.It`s a big financial step and at this point in time I do not feel 100% sure it`s a step I should be making.

So I will plod on as I`m doing now and maybe in a year see how my circumstances are.

Thanks for the advice though,it`s not something I wanted to go into blindly.