Can anyone advise how to get a home improvement loan with bad credit?

foxy-stoat

You have household income of £80,000 with £360,000 of equity in your current property....you should be releasing equity and clearing your debts and pull out the additional funds to refurbish the rental.

Maybe you could re-mortgage it to a BTL after a year or two of it being let out with good tenants and repay your current mortgage back to 50% LTV.

Brock_and_Roll

I looked into selling, but the elderly relative won't agree to that and I see this as a pension and something to pass down to the children.

Firstly the OP is making the assumption that by "investing" £50k, there will be a £80k book profit after 5 years - this does not take account of the interest costs of the additional borrowing, the interest costs on the DMP, CGT liabilities and makes assumptions about the state of the property market in the future.


Secondly, no bank with any sense is going to advance funds given the DMP - the OP is able to make their mortgage and bill payments precisely because they have defaulted on the terms of their credit cards and loan debts - from the bank's perspective it looks like tempting lightening to strike twice in the same place.


Obviously, the elderly relative can decide not to sell until the situation is forced up her. However, the most sensible and responsible solution would appear to be to sell the property at auction, use to proceeds to pay off the DMP with any spare money invested/saved elsewhere.

Clive_Woody

ammywatson wrote: »

The most easy way to get cash in financial emergency is by taking the quick payday loans online. payday loans are very useful when borrowers need a short-term loan for taking care of their emergency expenses.

So you are offering a payday loan for £50,000

I wish I had paydays like that :money:

JimmyTheWig

PJVW wrote: »

I have been given half ownership of a derelict semi-detached house currently worth £150k in a very nice area. The owner is a relative who is too elderly and poor to renovate it so they have given my wife and I half ownership in exchange for extending and modernising it and then renting it out, splitting the rental income 50/50.

Did you tell this elderly relative that you had no money, or means to borrow money, to do the house up?

forgotmyname

A loan to pay of a DMP ?

I nearly fell off my chair..

Herzlos

foxy-stoat wrote: »

You have household income of £80,000 with £360,000 of equity in your current property....you should be releasing equity and clearing your debts and pull out the additional funds to refurbish the rental.

Exactly this; your only real option is trying to free up some equity in one of the houses. Your DMP won't let you borrow additional money so I've no idea if you can even do that.

Have you been saving up any of your £900/month disposable income?

How much will it cost if you modernize it without extending?

MEM62

The numbers don't stack up.

Your half of the £900 rent comes to £270 per month - after tax but before expenses. (Agency, costs, insurances and on-going maintenance) etc.

An unsecured loan of £50K would be difficult against an income of £80K - even without other £11K of debts and DMP. Even if you could borrow this amount the rate will be high.

The only chance I see you have is a secured loan against your current property but your history is counting against you. Try speaking to a mortgage broker and see what feedback you get.

Herzlos

Sell that house and use the cash to buy another one outright that you can let out?

PJVW

foxy-stoat wrote: »

You have household income of £80,000 with £360,000 of equity in your current property....you should be releasing equity and clearing your debts and pull out the additional funds to refurbish the rental.

Maybe you could re-mortgage it to a BTL after a year or two of it being let out with good tenants and repay your current mortgage back to 50% LTV.

That would be the best solution, but as we are on a DMP we can't increase our mortgage...

PJVW

MEM62 wrote: »

The numbers don't stack up.

Your half of the £900 rent comes to £270 per month - after tax but before expenses. (Agency, costs, insurances and on-going maintenance) etc.

An unsecured loan of £50K would be difficult against an income of £80K - even without other £11K of debts and DMP. Even if you could borrow this amount the rate will be high.

The only chance I see you have is a secured loan against your current property but your history is counting against you. Try speaking to a mortgage broker and see what feedback you get.

Many thanks for the useful info, that's a very good point re tax, expenses etc., I'd lose 40% straight off and agency costs are around 8%.

I did look at modernisation, but this house is a typical 70s property with a bathroom taking up 1/4 of the lounge and making it very dark.

I've decided to keep the DMP and fund the work from my savings and income. This will slow the progress down, but at least I don't need to borrow more as the brokers I've spoken to say that with the DMP nobody will lend to us and even if I did pay off the DMP from my savings it would take about 6 months for our credit records to improve enough to get a loan.

Thanks to everyone for all of your help :T