Remorgaging - I don't understand!

lemonadelifestyle

Please can someone offer me some advice - my partner and I are first time buyers and have been living in our two bed house for 1 year now. We really want to get our bathroom done (it's gross!), but have no savings to be able to afford it.

We have been advised to release the equity on our house and pay for it that way, but I have no idea what this means and if this is the best option for us.

Please can someone break this down and help me understand what I should do?

Thanks in advance!

TrickyDicky101

What size of deposit did you put down on your house? Was it a new build originally? What was its total value when you purchased it?

After 1 year of a standard 25 year repayment mortgage you will have repaid 2.06% of the capital advanced (assuming a rate of 5%) so you will have generated very little equity unless the value of your home was significant to begin with or prises have risen substantially in your area over the year.

caprikid1

If you remortgage your payments will go up. You have no savings to I would be concerned that you can afford to pay more.

Remortgaging will spread the cost of your bathroom over the life of your mortgage, far longer than it is likely to last.

Did you put down a large deposit ? What is your current LTV.

Remortgaging for home improvements can often by an expensive way of buying items due to the term. You need to review the costs of each option to purchase and decide which is best for you.

Personally I would say save up !.

Jenniefour

Try saving - works every time. If you can't afford it now then releasing equity might be a problem as well - not so easily done these days. Lenders will be looking again at your affordability position.

Go over to the DIY board and see if you can get some ideas for doing your bathroom cheaper. Do really need to do a full refit? Some bathrooms that look manky can be sorted with re-tiling and redecorating. Unless, of course, you've inherited a maroon or avocado suite!!:eek:

Foxy-Stoat_3

Releasing equity for a bathroom in a house? Not a chance!

Look at Wickes, B&Q and Better Bathroom sites for prices of bathroom suites. If your not planning on re-arranging anything it shouldn't be that costly to change a bath, wc and basin.

You can spend a few thousand easy, but you can also spend a few hundred and it will still look nice.

lemonadelifestyle

Thank you for your fast replies! All are very helpful. The bath needs to be replaced and the floor and the roof, think it would cost around £5k just for the roof.

It would take us years to save for it to be done, so I'm looking for ways to borrow money but doing it sensibly.

Any suggestions would be appreciated.

Thank you

~Beanie~

You still haven't givwn any figures. What is your LTV? (value of your house minus amount you currently owe). As has been pointed out, you possibly haven't got any equity to release.

Thrugelmir

The state of the property must have been obvious when you bought the property. Has something changed in your personal circumstances in the past 12 months. As if it there is. Might well impact your ability to borrow.

lemonadelifestyle

We bought it at £125,000, and put down a 10% deposit of £12,500.

Looking at comparative houses we predict our house is now worth between £140-150,000.

bazzyb

lemonadelifestyle wrote: »

We bought it at £125,000, and put down a 10% deposit of £12,500.

Looking at comparative houses we predict our house is now worth between £140-150,000.

Where do you live? If it's not London, I would be very surprised if the property value has risen by 20% in 12 months. Do the 'comparable' properties also need a new bathroom and roof repairs?

Foxy-Stoat_3

if you insist on borrowing to redo your bathroom then get a loan as pulling such a small amount out of your secured equity will cost you too much over the remaining term, assuming your lender allows you to release for this reason, you will have to meet the new affordability tests and do the 1-2 hour interview.

If you haven't managed to save then you probably can't afford a loan.