Remortgage adding loan.

bambi1980_2

Hiya everyone,
My 2 year fixed rate mortgage comes to an end at the end of June this year. I bought my house in June 2005 for £66000, I got a mortgage of £56000 after putting down a deposit. My monthly payments are £325.74 p/m. I recently got a £10000 loan out over 5 years to consolidate my credit card and small overdraft. I got this at a good rate of 5.9% and the payments are £193 p/m.
I was hoping to add this loan to my remortgage when I take it out. I have been told my house is now worth £73000 so I will need a mortgage of approximately £64000 to cover what I owe and the loan leaving me equity of about £9000.
My repayments are going to be £401 p/m now which is going to leave me with more money left over to do my house up etc. I am just worrying incase house prices drop and I end up in negative equity. I am also thinking that I could have this loan paid off in just under 5 years rather than adding it to my mortgage for a further 23 years and paying more interest etc.
Also my dad gave me the £10000 deposit when I set up my first mortgage and I feel a bit guilty adding my loan in effect using up the equity I would have to pay off debts that I've accrued. He doesn't know I owe so much and if he ever asks he'll probably go mad that I've used his money to pay off my loan.
I'm just worrying too much but was looking for some advice from people who have perhaps been there.
To be honest I could do with the extra money each month whichadding the loan will free up but the moral issue and thought of house prices dropping are affecting my judgement..
Any thoughts/advice would be great

Thanks folks!!

JoeK_3

Bambi, you do NOT need to put a consolidation loan over the same term as the mortgage.

Some lenders will allow you to have one interest rate and different terms for the mortgage and the loan.

JoeK

MarkyMarkD

It will quite possibly be very hard to remortgage unless you do pay off the consolidation loan, as it makes a big dent in your income and hence the affordability of any mortgage.

I'm not sure why you bothered getting a consolidation loan just a few months before remortgaging - unless you aren't going to pay any penalties on settling it after only a few months, wouldn't it have been better to simply consolidate everything onto the mortgage in June?

If your Dad lent you £10k and you will still have £9k after the remortgage, you won't really have used his money to pay off your debts (apart from £1k of it) - the debts will have been cleared by equity withdrawal.

bambi1980_2

Thanks for the advice. JoeK do you know if the Halifax is one of these lenders whom do what you said? The mortgage advisor did not mention this. He was acting on behalf of the broker though. I think I will see what the valuation brings up. If it is worth less than I thought I think I will just continue with the loan.

cbsexec

I remorgaged a couple of years ago and added a loan to it but only over 5 years The loan was then on a lower interest rate but I was still paying it off in 5 years. The rest of my mortgage wwas over 15 years.

AndrewSmith

To be honest with a rate of 5.9% on the consolidation loan I think personally you would be unwise to add it to a mortgage.

Assuming a term of 23 years and a rate of approx 5.8% it would cost you roughly an extra £7,000 over the 23 years to repay this £10,000.

Do not add short term unsecured debt to a mortgage unless you have absolutely no other option.