24K Loan

cactus84

Hello

We wanted to re mortgage our house for an extra 24K to do home improvements. We have a Right to Buy mortgage but turns out Halifax wont release the money until work is 100% completed and signed off by them (a condition of a RTB mortgage) no builder will take on the job as they want paying on the job. We had an agreement in principle with Halifax and was all ready to go ahead but had to cancel the application due to the stumbling block we hit. we can't go elsewhere as we are tied to Halifax for another year and do not want to wait till then.

So been looking at loans and we have an appt with halifax coming up for a 24K loan over 7 yrs. My question is whats the likelihood of us getting the loan?? we currently save 227 per month, which we pay on the mortgage every so often, so that would be used for the loan payment. We have worked out our financial states and it shows clearly we have 750ish left after bills and expenditure.

Thanks in advance

Gaz83

What's your salary (salaries)? Current outstanding debt? Credit history (note: NOT rating)? What do you currently do with the £750 left over?

Caz3121

much will depend on your income and any existing debts. As a very rough guide use a (unsecured) debt to income ratio of 50%. So if you have a salary of £48k+ and no existing debt it may be doable with a good credit history
Will your situation be similar for the next 7 years....maybe babies and a reduction in income which may see household income reduce and expenses increase...just something to consider

cactus84

Current annual income 26k. Good credit history, no loans or debt. Currently we try and save as much as we can, but this money just tends to get spent on luxuries we don't need.

We can afford the loan and we got approved for the remortgage of 24k extra.

Cheers

somethingcorporate

You wont get a 24k loan on a 26k salary. Sorry, won't happen - it's well over a year's take home pay.

cactus84

Sorry we have 830ish left after bills and expenditure , I was looking at the wrong spreadsheet.

cactus84

Right... Even if on paper it's doable?

Caz3121

cactus84 wrote: »

Right... Even if on paper it's doable?

banks will assess the risk based on a number elements and decide whether and what they are prepared to lend to an individual
Life gets in the way and you cannot be guaranteed to always have £850 per month spare...job losses, illness etc
With respect, from a previous post, you have had defaults, and loans passed to debt collector, I am sure when you took out those loans, you looked at the numbers and they made sense on paper but then life maybe got in the way and all of a sudden you cannot pay it back at the rate you agreed to. Whilst your defaults may no longer be visible to lenders, you have to appreciate why they restrict the amount they loan if they know that % of of borrowers will breach their agreements so they will assess how much they would risk losing to an individual.
If you had a mate but you did not know of his attitude to money says to you "would you please lend me some money, I promise I will pay you back with interest. Do you:
a) say "sorry mate" as you have no idea whether this person will ever pay you back as you have no idea if he has previously borrowed and paid back on time or has the person every borrowed but when paying it back, they do for a little while then stop paying and you don't want to risk losing your money
b) limit the amount you are prepared to lend because as a) you have no idea if you will get it back but you have a lot of spare money around and think, ok I'll take a risk...but I will be making sure I add interest for taking that risk...now how much am I prepared to risk losing based on my own circumstances
c) say "sure, how much would you like?"

cactus84

Already said it's 26k. Thanks for the post caz3121, made me think.

I just know it's doable and the past debt was from being young and stupid with credit cards. That's in the past now and I have responsibilities and also we plan to remortgage in 1 or 4 years when we can go away from Halifax and the council and pay off the loan. I have spent hours and days going over the sums and it's doable and we wouldn't be struggling.

Like you say it's up to the bank. Pity the remortgage isn't straightforward as a normal remortgage cos they said we can have the money.

MEM62

cactus84 wrote: »

Already said it's 26k. Thanks for the post caz3121, made me think.

I just know it's doable and the past debt was from being young and stupid with credit cards. That's in the past now and I have responsibilities and also we plan to remortgage in 1 or 4 years when we can go away from Halifax and the council and pay off the loan. I have spent hours and days going over the sums and it's doable and we wouldn't be struggling.
The affordability test you need to pass is the bank's not yours. They require much more leeway for unexpected circumstances. And they are probably right. How many posts on here are by people in financial difficulty 'due to unexpected changes in circumstances'?

Like you say it's up to the bank. Pity the remortgage isn't straightforward as a normal remortgage cos they said we can have the money.

If the work to the house can wait, be patient and wait until you can re-mortgage. In the meantime build those savings instead of paying down your mortgage. That way you will be able to fund part of the work from savings.

Suarez

somethingcorporate wrote: »

You wont get a 24k loan on a 26k salary. Sorry, won't happen - it's well over a year's take home pay.

I got a Halifax loan for £25k on a gross income of £17,000.