clearing debts and home improvements using property

william_john

I have recently inherited a property which myself and my partner are living in, the property is worth 180k-200k. We have debts of around 40k and would like to carry out home improvements of around 20k-30k this would bring the value of the property up to 240k-250k in line with the other properties in this area. We would like to release 40% of the value of the property now to pay of the debts and pay for the home improvements. The problem is that we started a small business in July of this year which has done quite well but this business will be quiet in January and February which is when we want to carry out the home improvements. Before starting the business I was employed for 14 years continuously but made redundant in February and used the redundancy money and a small loan to start the business. As the business hasn't been operating for a year we have accounts only from July of this year when we started which rules out the remortgage option so my question would be what other options do I have to raise the money we need?

Gaz83

Wait a couple of years.

19lottie82

the same problems will also apply to any unsecured loans im afraid. and that's without the issue fo your 40k existing debt.

as you are already in quite a high amount of debt, would it not make more sense to sell the property in it's existing state, pay off your debt and downsize? I can't see you getting the loan you're looking for tbh, due to your existing debt and short term self employment

william_john

Thank you for your replies, waiting a couple of years isn't an option i'm afraid. Downsizing isn't an option either as this is my family home which my father built himself and the emotional value for me is immense especially as he only died last year. There must be another form of refinancing as i'm asset rich and cash poor at the moment we are paying around 1200 a month to service our debts which is sustainable till January but from January till March the business won't be able to sustain that amount however from March till December the forecast for our business is highly promising. Is there another form of refinancing I can look at?

House.buyer.sarah

I think you gonna struggle to 80k loan , we moved into our house in April this year and although we were tempted to get finace for improvements we've scrimped and scraped and sacrificed dsys out to make it habitable .. We do however still need kitchen but my point is save and do it no amount of debt feels as good as debt free , if you are really needing 80k I guess it comes down to figures of what you and your partner earn to finace such a loan ( do any companies Even lend that much I thought most was 25k ?
Good luck though in whichever path you choose ..

Gaz83

william_john wrote: »

Thank you for your replies, waiting a couple of years isn't an option i'm afraid. Downsizing isn't an option either as this is my family home which my father built himself and the emotional value for me is immense especially as he only died last year.

Then the trade-off for that emotional attachment is that you won't be able to do what you're wanting to do.

No-one is going to give you a loan of £80k, neither secured nor unsecured, if you have very little income coming into a new business.

Thrugelmir

william_john wrote: »

Thank you for your replies, waiting a couple of years isn't an option i'm afraid. Downsizing isn't an option either

Unfortunately you choices are limited. Best to wake up to the reality. Lenders set the terms of business not the customer.

19lottie82

william_john wrote: »

Thank you for your replies, waiting a couple of years isn't an option i'm afraid. Downsizing isn't an option either as this is my family home which my father built himself and the emotional value for me is immense especially as he only died last year.

OK but you have to understand that a loan isn't an option in your situation either. You don't have the records to prove your income so no one will lend to you.

If you don't want to sell, or wait then there are no other options, sorry.

I understand your connection to the house but this really is a heart vs head scenario. I think you know what the sensible option is here. Your up to your eyes in debt with all your money locked in a house you can't afford to maintain.

Pixie5740

Is the house not currently habitable? Is that why you need to carry out the home improvements now? If the house is habitable, but just not as you would like it, then in your shoes, I would just live with it until I could afford to do something about it.

As for your current debts, are these unsecured debts? If so I wouldn't go changing an unsecured debt into a secured debt. Especially as you've just started a new business. If you were somehow able to get borrowing secured against the house and you had a few rocky months with the business and couldn't afford to service your debts you would risk losing the roof over your head.

Borrowing more money to get out of debt is rarely the answer anyway. A better solution would be to put together a statement of affairs and examine your income and expenditure. Cut back on non-essentials and try and reduce essentials such as electricity as much as you can by shopping around. Then use the money saved to snowball your debts.