Declined Extra borrowing on Mortgage

NICOLAWB

I have a nationwide mortgage 264k on a house worth 380k. We refurbished the house on credit cards with the view to get more mortgage once it was complete to cover it.
Have today applied for extra borrowing of 40k to cover credit cards and it was declined with the reasoning that we have too much debt. But it was all to be covered by the extra borrowing.
Does this make sense?
How long would you leave it to reapply?

kingstreet

Nationwide will decline a high level of unsecured debt on a policy basis, regardless of you wanting to borrow from them to repay it.

Who advised you to use credit cards for property improvement?

It may be possible to get a second charge loan for a period, then ask Nationwide for additional borrowing to repay that, but seek advice on this first, as I'm not certain this is a sensible route.

You may find you have to remortgage to a new lender for the full amount, mortgage and card debt instead.

NICOLAWB

Thank you for this advise.
So Nationwide is a no go.
Should we wait 6 months then remortgage? As we have been declined today?

NICOLAWB

Are there any other lenders who will also decline because of unsecured debts even if they are to be repaid?

Foxy-Stoat_3

You are trying to use equity for debt consolidation regardless what the money was spent on.

Lenders will have their own policies about drawing cash from the equity to clear unsecured debt. Your better off seeing a whole of market broker as they will know which lenders who will allow debt consolidation for the reason for the release of equity.

If the value of £380,000 is realistic then you should be able to find a solution.

NICOLAWB

Thanks Foxy-Stoat.
The £380k I think is realistic as its the Nationwide House Price Index figure and also lower than houses in the area seem to be going for.

Should we still wait the 6 months before going to a broker?

kingstreet

Why do you think you have to wait six months?

Provided you've owned the property six months or longer, you should be able to look at a remortgage now.

If you have any early repayment penalties payable on the redemption of the Nationwide mortgage, these will come into play.

NICOLAWB

I was thinking you had to wait 6 months because of the decline and the credit checks?

NICOLAWB

We do have an early repayment charge which goes down to 2% in April so would wait till at least then anyways.

Mortgage_Mark_2

NICOLAWB wrote: »

I was thinking you had to wait 6 months because of the decline and the credit checks?

No, this is not the case.

kingstreet

^^^

What he said!