Help ME!!!!

slimshady_2

All this mortgage info baffles me!!! Rite here is the story we have a mortgage of 83450.00. I have a loan of 5500.00 which i am jsut about to start paying (this was combined credit cards) IT is going to cost me 205.00 a month. On adding up our finances I see this is really going to stretch us and I would just love to add it onto the mortgage and get rid of it. I understand I am goin to pay a lot more in the long term but at least we would have a bigger disposable income each month. We have had mortgage for 17 months. Houses around our way are now being valued at around 103-105k. Bit about our mortgage says this:
You can borrow money for any purpose
You can borrow up to 95% of your home's value (including the amount of your existing loan) for home improvements, or up to 85% for other purposes.

How much do you think we would be allowed to borrow then!? (I am not great with percentages!!!)
Debs x

Fairdo_2

Debs

Assuming 85% of £105,000 then you could borrow a total of £89,250.

(Assuming none of the borrowing was originally for Home Improvements - How can they prove that they weren't?)

This would mean that you could borrow a further £5,800 (including additional loan - Check if there is an Early Redemption Charge on that!!!)

If you needed up to 95% of £105,000 value, then the borrowing could be up to £99,750. Bear in mind that you may have a "higher lending charge" at this level, depending on Lender.

Obviously I would put the usual caveats, but you have detailed you know the pitfalls in your post

slimshady_2

So you rekon I could pretend I wanted say a new fitted kitchen and take advantage of the 95% extra borrowing? They pay it to me and I just automatically pay of my loan?
Thks Debs

herbiesjp

You can tell them it is for paying off the loan - they do not mind

slimshady_2

yeah I know that but if I tell them its to pay back a loan I can only borrow upto 85% which isn't enough to cover the loan!

herbiesjp

£5500 loan + £83450 = £88,950

This £84.7%

I think you could do it providing the property is valued at £105k

Fairdo_2

No. I was working on the assumption that you can tell them that you were paying off Loans or Credit originally used for Home Improvements, as this is normally under the same category as borrowing for the purposes of Home Improving for the future. They would be unlikely to ask for proof that the credit you took was to Home Improve and they are less likely to ask for quotes of future work.

To make it clear, your lender is likely to categorise "Paying off credit used to make Home Improvements" rather than borrowing "to home improve".

Check with your specific lender.

But as Herbie already intimated, you shouldn't need to go above 85% LTV (Loan To Value) anyway, as this should pay the loan, unless the Early Repayment Charge is excessive.

dougk_2

Is your credit rating good? Can't you get a 0% credit card to transfer your balance to, hence saving you money?