Equity vs other loans/mortgages

Damien764

Hi,


Recently we have inherited the house with mortgage already dealt with and paid for. However the social services require £30,000, along with a relative's share of the house to be bought of for £60,000.


So in total a £90,000 loan/equity needs to be taken out.


The bonuses of us are...
We are both 23 years of age and both earn just over a grand each month.
We have no bad credit ratings or any of the such.
We have both neither been overdrawn.
The loan we're taking out is much less than the house is worth.
We have calculated amongst other cost (food etc) we can afford approx. £400 a month each (meaning £800 in total) to pay off the loan.
If any boyfriend/girlfriend 'complications' happen, we have secured this and a signed document will be made and dealt with displaying who's share/money etc goes to who.


So hopefully as you can see we have put a lot of thought into this and checked every corner as it were, The problem is neither of us has any experience with loans or even banks for that matter! Neither one of us have ever used credit cards and only take out what we need and putting the rest into savings.
Any suggestions on what type of loan to go for? At the moment were seeking advise from a Lloyds bank advisor, a weeks away. But being new to this and never dealt with any type of loan, this is all happening to fast and having trouble keeping up with what to do.


The money side is basically sorted, we have looked into everything from food bills to monthly phone contracts to yearly insurance quotes (only for me, who currently owns a bike).


The few downsides are of such my contract hours are only 26 per week, yet my overtime is above full time and quite guaranteed aswell. But we reckon the fact the house will be placed as insurance for the bank, this will most likely be over looked.


If things get worse, we both have savings and if things go really bad, parents who can help us on the way, so there isn't really a chance of having any such problems paying the bank back.


So the only question we have and are desperate for feedback and answers is what is the main difference between Equity, Security loan, 'non' security loan, mortgages (which I assume is equal to an equity?)


Appreciate the help from any one, as previously stated this has fortunately, yet unfortunately aswell been dropped on us and as anyone would agree £90,000 for a 3 bedroom decent house, is a deal not to be thrown away with.


The trouble we have is getting the right deal and hopefully knowing our options before the bank can take us for a spin!


Thank you,
Yours Faithfully,
Damien.

BrassicWoman

which one of you has actually inherited the share in the house?


would you be better selling the house and buying somewhere more affordable given your low salaries?

Damien764

My girlfriend is the one inheriting the house, the loan will be split half half, then if anything happens I will be getting my share of money that went into it back. But this won't happen, yet it seemed a good idea to plan as no one ever knows.

We have considered it, but the problem is with where the house is located near schools, shops etc. This has proven to be a very good home for the future especially with 3 bedrooms and also being able to add stairs to the loft will then finalise that room, making it a 4 bedroom house if needed. Furthermore it's been a family home and would be sad to see it go.

We have looked into renting aswell, but going by what others have said, this seems to make buying a new home more unlikely to be able to afford in the future and although are income, £2300 from both of us, isn't the best, we were hoping that by sacrificing a few spending holidays/meals out this could be done.

I believe we could make the mortgage reduce monthly pay if we choose 35 years instead of 25. But as this means we have to pay more at the end of it we are not sure if it's worth while doing yet.

ViolaLass

Have you tried putting your details into a calculator on a bank website and seeing how much they might lend you? £90k when you earn £12k each (net? gross?) is quite a lot.

BrassicWoman

Are you willing to take a lodger or two to up your income?