Can we really not release equity?

walby1993

Hi all,
I need some advice from those "in the know". DH and I bought our house a couple of years ago with a 10% deposit. Since then, house prices have increased plus we have done some work on it meaning that we have somewhere between 20-27% equity in the house.

There is still work we want to do on the house (build a conservatory, get kerb dropped and drive done) which will be costly so we were hoping to release the equity from the house (probably leaving 15-20% depending on its value and, therefore, how much equity we have). HOWEVER, when we brought the house I was working part-time. I am now a sahm. This obviously reduces the household income. Am I right in thinking this means we won't be able to release the equity (the "how much can I borrow?" Calculator on here is showing we can borrow £30k LESS than what we currently owe). Or will they actually look at it sensibly and say "well you have successfully made mortgage payments for the last year without a second income, you have no loans etc and your mortgage payments would be around £150-200 lower so you can afford it"?

TIA

ACG

Sensibly is ensuring you can afford the repayments now and in the future WHEN interest rates rise.

You need to check the lenders affordability calculators not the one on here as all lenders have different calculators that can vary massively or alternatively speak to a broker and get them to do the leg work.

walby1993

But that's my point - we are affording repayments of nearly £1k a month at the moment. Looking at how much we want to borrow and the interest rates offered the repayments would be circa £750. So when interest rates rise, we can afford it as we have proved for the last year we can make payments of nearly £1k.

From what I can see, however, they just ask what your income is, multiply by a number (around 4.5 from what I have briefly looked at on bank calculators) and that's how much they are prepared to lend you, regardless of whether or not you have proved you can afford above that.

David_White

If you applied for new borrowing they would re-assess your affordability based on your current income and expenditure.

Whilst it is always a good thing having a history of up to date payments it's unlikely to be a deciding factor if ultimately the income doesn't stack up.

foxy-stoat

Can you not save up for the works you want to do?

kingstreet

Your previous payment record is part of the decision to lend to you or not, same as credit history.

The decision how much to lend is purely based on future affordability.