Secure Loan to consolidate debt for 12 months

yazzoo6

Hi all,
This is my first post on MSE, I need some advice! My husband and I have spent the last 12 months virtually knocking down and rebuilding a bungalow that we bought last year. We didnt quite have sufficient funds to complete the rebuild and as advised by our mortgage company, they would not be able to remortgage the house and release some equity without it being complete. Our house has rocketed in value (bought for £350k, now worth £600k) but because we now have a series of loans amounting to £50k, they have refused our application to release any equity at this stage. We know that by September we will be in a much better financial position having had pay rises, stopped needing to pay childcare, husband received large bonus thus paying off part of the debt and are confident we can remortgage at that stage. However, we cannot afford to get to September without consolidating this £50k debt. I have been looking into secure loans but I am concerned about the huge brokers fees. Has anyone got any recommendations who are reputable or offer particularly good rates?


Thanks in advance

DCFC79

yazzoo6 wrote: »

Hi all,
This is my first post on MSE, I need some advice! My husband and I have spent the last 12 months virtually knocking down and rebuilding a bungalow that we bought last year. We didnt quite have sufficient funds to complete the rebuild and as advised by our mortgage company, they would not be able to remortgage the house and release some equity without it being complete. Our house has rocketed in value (bought for £350k, now worth £600k) but because we now have a series of loans amounting to £50k, they have refused our application to release any equity at this stage. We know that by September we will be in a much better financial position having had pay rises, stopped needing to pay childcare, husband received large bonus thus paying off part of the debt and are confident we can remortgage at that stage. However, we cannot afford to get to September without consolidating this £50k debt. I have been looking into secure loans but I am concerned about the huge brokers fees. Has anyone got any recommendations who are reputable or offer particularly good rates?


Thanks in advance

What would you class as a good rate ?

You do know the rates offered for Joe Bloggs will be different to a rate offered to you.

Are you aware of the risks associated with secured loans ?

Have you tried googling secured loans as uswitch pops up as 1 of the top 5 links.

yazzoo6

Hi there,
Thanks for responding. I would say under 4% would be a manageable rate but equally important is the fee associated as I have seen some good rates but crazy £3k arrangement fees.


Any suggestions appreciated

yazzoo6

Definitely aware of the risks associated with secure loans, I am comfortable with taking one on short term, I just dont really want to pay a big broker fee for a short term solution

financegeek

to qualify for a secured loan under 4% you'd need to be sub 65% loan to value, which from the sounds of things you should be based on the increased property price?

your credit score would also need to be relatively high to qualify for the most competitive rates. Pretty much all secured loan lenders would also pay off existing creditors direct, so they'd discount this from an affordability calculation which should help you out from that point of view.

fees wise generally they've come down since the implementation of the mortgage credit directive last March, although there are still a few brokers charging high fees.

it might be worth speaking to a couple of brokers and asking for copies of their terms of business as this should illustrate what fees they charge. Just remember that in addition to the broker fee you'd probably need to pay a lender fee and valuation fee, but these do vary between lenders, so wouldn't be confirmed until they've had a chance to run searches.

also watch out for early repayment charges if you're looking to redeem quite quickly!

hope that helps

foxy-stoat

£50,000 over 12 months @ 4% interest is over £4200 a month in loan repayments - how much is your monthly payments on your current £50K of debt?

Can you not get a few more credit cards and do some 0% balance transfer shuffles for a few months to tied you over till September ?

enthusiasticsaver

I don't really understand how consolidating the existing loans will help you. What interest rates are you paying on them and how much do you need to complete the refurbishments?

I seriously advise against consolidating on to secured loans. Budget and save for remaining works. Just because your property has increased in value it does not mean that releasing equity is a good idea. You need to look at affordability too (ie what will the monthly repayments be and are you in a position now to afford them?). If you are struggling with existing repayments borrowing more is not the answer.

CLAPTON

why not post up your current debts, APRs, monthly payments and dhow much you can afford to repay each month
as you description of your problems don't seem very realsitic

whilst it makes sense to reduce interest if you can, to commit to over 4,000 per month implies a very high income but you have no guarantee you will be able to remortgage in september

DebtFreeDebbie

I'd agree with EnthusiasticSaver here. Based on your circumstance, I'm unsure if borrowing more is necessarily the answer. Lower interest rates are always great but whether that's a realistic outcome is another matter. That, and it's easy to gloss over what the actually monthly repayments will be. Would you be able to meet those? Just some thoughts!

Paul_the_Painter

I think that the OP is wanting to borrow £50k for 12 months with the lowest costs possible on a monthly basis, probably as close to just the interest as possible, then remortgage in a year to pay back the £50k with a normal mortgage for a higher amount than they have now.
It's not my impression that they way to borrow £50k and pay it back at over £4000/month!

I think they would be better advised to see a mortgage broker instead. It could be cheaper and with more likelihood of success to just pay the early redemption on their current mortgage deal, and get a new mortgage.

This doesn't sound like a classic case of "don't turn unsecured debts into secured debts" it sounds like the plan all along was to renovate the property, using a mortgage as finance.

BrassicWoman

is tere an awful lot to do to finish the rebuild? would a smaller loan get you there?