Husband and wife taking loan, the best option

paul332

Hi,

We are looking for home improvement and will need around £50,000. The plan is that my wife and I will each apply for £25,000 personal loan (not much equity just now). Once the work is done we will pay off at least part of this loan from the equity that will be added to the house.

Given that the 50,000 is not needed upfront (it will be at least a 2 months job), from saving point of view it makes sense that one of us applies now for 25, and after a month (when the rest of the money is needed) the other one applies.

My question is, does one of us applying affects the chances of the other one? We are both working full time.

If we know that this may reduce the chances for one of us then we may consider applying 'almost' at the same time. This may mean keeping 25 aside for a month with no use while paying instalment for it.

Any advice is most appreciated and if my question is not very clear please do let me know.

Many thanks


Paul

jonesMUFCforever

How do you propose to repay using the 'equity' in your home?


Are you re mortgaging? If so have you been through the new mortgage application process? If not you may be in for a shock.

bris

For 25k you will need some sort of security, it's doubtful you will get an unsecured loan for this amount.

Without the equity in the house you have no security there, do you have anything else to secure the loan?

If you do get the first 25K you will struggle to get the second, banks can take joint income into consideration so they would find out your wife has 25k already, this would cause problems.

Can you afford to start a home improvement you cant finish, if you contract builders etc for 50k and only get 25k you could be in trouble.

Caz3121

What are your salaries and existing debts?
You would need a large salary for a £25k loan

chalkie99

paul332 wrote: »

it makes sense that one of us applies now for 25, and after a month (when the rest of the money is needed) the other one applies.

It doesn't make any sense at all.

If you happen to get the first loan and start the work, then fail to get the second loan, you will have a partly finished house which will be worth less than before you started and, possibly, un-mortgageable.

You could be digging yourselves a hole in more ways than you intend.

lynz68

£25k is at the very top end of personal loans. To get this you would need to be earning £50k with no other debts. Do you both earn this?


Have you looked at monthly repayments for this and would you have a substantial amount of extra money each month to cover this?

Spending £50k on renovations does not mean you will ad the same to the value of your property.

When you go to remortgage to release equity lenders will take into account your outstanding debts and cannot assume you will pay the loans off.

Your plan is very risky I think you need to do a lot more research before proceeding.

paul332

Thanks for your replies and comments. Our salary is not bad and I do have some help from family if needed. I have thought of the possibility of not getting re mortgage and although it is not an ideal situation I think we will be able to cope.

What I really wanted to know was whether it was better for the two of us to apply at the same time or to do this with a month gap. I gather from the following advice by bris that we may be better off if we apply at the same time:

If you do get the first 25K you will struggle to get the second, banks can take joint income into consideration so they would find out your wife has 25k already, this would cause problems.

Please let me know if you have further any advice on this particular point.

Many thanks.

Paul

BillJones

paul332 wrote: »

What I really wanted to know was whether it was better for the two of us to apply at the same time or to do this with a month gap. I gather from the following advice by bris that we may be better off if we apply at the same time:

Yes, I'd say so. Apply AND draw down the loan, I'd say, as at that point, you know you have the full amount needed.

Sorry to belabour a point made above, but I'd also recommend that you think carefully about how you intend to pay of the loans "with the equity" in your house. Equity, of course, can't be used to pay for anything, so you presumably mean that you want to remortgage. Please be aware that many banks are tightening lending criteria, and taking more account of affordability (their calculation of what that means, not your belief), and so it may not be as straightforward as you think to remortgage after the works.

I think that it would be a good idea to borrow the money initially on terms that you know that you can service for the life of the loan.

paul332

Thanks for the advice Bill, very much appreciated.


Paul

scottishblondie

paul332 wrote: »

Thanks for your replies and comments. Our salary is not bad and I do have some help from family if needed.

Is "not bad" £50k+ each? TBH I can't see any lender offering an unsecured personal loan with a salary any lower than that.

Also when you come to re-mortgage this additional £50k credit commitment will be very likely to cause you issues. They will not treat it as if you are going to pay it off with the mortgage money, it will be viewed as a permanent commitment over and above the mortgage. If I were you I would not proceed with this plan, it seems too risky.