remortgage problem

william_john

I am 41 years old I was made redundant in February and used my redundancy money to start a small business with my partner which started trading in July. My father passed away in April of last year and I inherited his house which is worth between 180k and 200k and there is no mortgage or loan on the house. I have a loan and my partner has some credit card debt and I want to spend some money on home improvements to bring the value of the house up to around 240k-250k which is the average for the area and to pay of my loan and my partners credit cards. I am looking to try and take 40% equity out of the house I inherited from my father to cover this but as I am now self employed and have only been so since July I don't have a lot of accounts to show my income, before February I was in constant employment for 14 years. I spoke to a financial adviser and he said this is a problem at the moment we are paying about 1200 a month to service the loan and credit cards and if we remortgage it would save a considerable amount in our monthly expenditure and the improvements would increase the value of the property. Is there a way around this as I still want to retain 60% equity in the house and once the improvements are made that would become almost 70% equity that I would hold. Any advice gratefully received

kingstreet

william_john wrote: »

I am looking to try and take 40% equity out of the house I inherited from my father

Are you living in this property, or is it let?

william_john

We are living in the property

kingstreet

In which case, a residential remortgage isn't going to be possible until you have at least one year's trading and accounts/SA302 for that period.

william_john

Is there another way around this? as surely all the risk would be mine as I would be holding the greater equity share.

kingstreet

You need to demonstrate affordability to the lender.

Unfortunately, the recently self-employed are unable to do that.

You could have 90% equity, but a lender will not risk the wrath of the FCA or a tag of "irresponsible lender" for lending to someone who cannot meet the lender's criteria for evidence of income.

Thrugelmir

william_john wrote: »

Is there another way around this? as surely all the risk would be mine as I would be holding the greater equity share.

Not the way lending works. Mortgage lending is a low margin activity for lenders. So criteria is far higher than other forms of loan. In addition lenders like to see people address their own credit issues. Providing an easy way out doesn't help them address the fundamental issues of why debt has accumulated. That more often than not will resurface again in the future.

william_john

ok thank you, I will have to look at other ways of doing this either home equity loan or bridging finance until July of next year when I will be able to supply accounts for a year and also by that time the improvements will have been done to put me in a stronger situation