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Borrowing a loan to pay off existing loan

adamski911
Posts: 110 Forumite
in Loans
Hi,
Currently me and my partner have an unsecured loan with northern rock which we took out with our mortgage 8 years ago.Since then we have moved our mortgage but we kept the unsecured part of the loan as we needed it to put down a 15% deposit on a new house.Problem was that the interest rate went up by 5% on the unsecured amount.
We were hoping to find another loan to pay off this loan as we could either cut the amount of years down by about 10 years or reduce the payments with a lower interest rate.Only thing is that most of the loans we have seen state that total amount of borrowing cannot exceed 15% borrowing of the value of the house which means we are already at 15% even though it would only be to pay off the existing loan keeping us at the same amount of borrowing.
Does anyone have any ideas of any lenders that we could borrow off with our current situation?
Currently me and my partner have an unsecured loan with northern rock which we took out with our mortgage 8 years ago.Since then we have moved our mortgage but we kept the unsecured part of the loan as we needed it to put down a 15% deposit on a new house.Problem was that the interest rate went up by 5% on the unsecured amount.
We were hoping to find another loan to pay off this loan as we could either cut the amount of years down by about 10 years or reduce the payments with a lower interest rate.Only thing is that most of the loans we have seen state that total amount of borrowing cannot exceed 15% borrowing of the value of the house which means we are already at 15% even though it would only be to pay off the existing loan keeping us at the same amount of borrowing.
Does anyone have any ideas of any lenders that we could borrow off with our current situation?
0
Comments
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It is unlikely you would be able to get a lower interest loan as you already have high levels of debt and this counts against your credit worthiness.
Consolidation loans for your debt would just count as extra debt to the lender as they can't force you to use the loan to pay off the other loan, so is also increased risk and would result in higher interest.
Why did the unsecured loan increase by 5%? Was this not a fixed rate loan or was it actually a secured loan and therefore when you moved this had to be paid and a new loan taken out?0 -
I would also say it is very unlikely you will get a new loan agreed, at least not one with a cheaper rate.
You say your unsecured loan went up by 5%, but don’t say how much the loan is for and what the present rate is.
Is there enough equity in your property to move the unsecured borrow over to the existing mortgage as this might help with the interest rate? However it would then depend on the new Loan to Value of the higher mortgage.
If you approach any lender asking to borrow money to pay of an existing debt, then many would not want to get involved.
I would need a few more specifics about your situation to give a more informed answer.0 -
how much is the loan
what is the APR
how much do you earn0
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