Reality Check?? Can This Happen??

devmcc

Hi all mortgage peeps..

Details are:
Our current Mort is £142000 - Standard Life
Joint Debts are £34000 - Loan(£22K) and credit cards(12K)

Current house value approx £275000

Had the house for one year and now looking to extend. Looking to take out an extra £55000 to pay off debts and for the building costs. By paying of the debts and taking out the mortgage we should be better off each month....

Both self emp for 2years.. joint income of around £52K - do our own accounts though but can be proved with bank stats...

What are the chances of us getting this extra mortgage??

Any advice would be smashing!!;)

robnye

devmcc wrote: »

Looking to take out an extra £55000 to pay off debts and for the building costs
Joint Debts are £34000 - Loan(£22K) and credit cards(12K)

Both self emp for 2years.. joint income of around £52K - do our own accounts though but can be proved with bank stats...

will £21K be enough for the extension.......... ...!

55 -34 = 21

devmcc

robnye wrote: »

will £21K be enough for the extension.......... ...!

55 -34 = 21

Hi there - Yes, it is only a 4*2m add on to the existing kitchen.. we have already got al the appliances etc..

devmcc

albertross wrote: »

Who knows, only a lender can answer that.

Better off each month or better off in the long run, the 2 are often very different especially if you have years/decades to run on the mortgage.

34000 @ 17% over 5 years = £15,396.13 in interest
34000 @ 7% over 25 years = £36,698.40 in interest

Hi there - I know... but in the short term it would help out no end!! And I fear the credit cards will just keep rolling...:rotfl:

robnye

in that case then, it comes down to the figs that albertross stated.....

are you happy to pay an extra 21k in interest

devmcc

Hi again - thanks for the early replies.. well over all I guess I am.. I have no other way of paying for the extension and I think it will add way more to the house than it costs (looking at other properties)... also, I know the debts are being cleared..

Do you think the figures add up?? I am going to approach my current lender first as I am tied to them till next year anyway... just want to make sure we are not a straight NO!!

Will they take into account the fact that we will be paying off our debts when checking affordabillity?? We both have good credit files...
Thanks again..

IveSeenTheLight

albertross wrote: »

Who knows, only a lender can answer that.

Better off each month or better off in the long run, the 2 are often very different especially if you have years/decades to run on the mortgage.

34000 @ 17% over 5 years = £15,396.13 in interest
34000 @ 7% over 25 years = £36,698.40 in interest

devmcc wrote:

Our current Mort is £142000 - Standard Life
Joint Debts are £34000 - Loan(£22K) and credit cards(12K)

Not meaning to sound like I am preaching but it seems like you have already have accumulated quite a bit of debt on your loans and credit cards.
You should aim to pay this off as soon as possible.

It does make sense to put this into the mortgage as it will be a lower rate thank your credit cards and I presume your loans, however as albertross points out, if you maintain this over the course of your mortgage you will pay more and should make overpayments to your mortgage in order to clear the additional debt on your mortgage within your existing loan period.

I can understand you see that you move the debt onto your mortgage and adding the extension loan onto your property would be appealing as you seem to clear your debt, extend your house and reduce your monthly outgoings in these areas, however you will be paying much more in the long run

If I were you, I would really consider waiting on the extension until you have yourself back on a much better financial footing i.e. clear your existing £34k debt.

Whatever you are comfortable with though

IveSeenTheLight

devmcc wrote: »

Hi there - I know... but in the short term it would help out no end!! And I fear the credit cards will just keep rolling...:rotfl:

hmmmmmm.....
If you clear your debt onto the mortgage will you be inclined to think hey presto, I have full credit again on my cards.

Whers the shops, Wheres the shops, wheres the shops....... (imagining its like the dog jumping repeatedly wanting you to throw the ball0

devmcc

Hi there - thanks... dont worry about preaching - the more advice the better!! The loan was to do work to the house when we bought it.. it was a wreck!! We have added around £80K to the value so far.
It just seems like the easiest way out of a tough situation..
I think the overpayment route sounds like a plan as we have a flexible mortgage...
Do you think the figures stack up re the amount we are looking to borrow??
Thanks again..

devmcc

IveSeenTheLight wrote: »

hmmmmmm.....
If you clear your debt onto the mortgage will you be inclined to think hey presto, I have full credit again on my cards.

Whers the shops, Wheres the shops, wheres the shops....... (imagining its like the dog jumping repeatedly wanting you to throw the ball0

No... No more balls!! In all honesty we are good with our money - the majority of the debt has been spent on the house...

IveSeenTheLight

devmcc wrote: »

you think the figures add up?? I am going to approach my current lender first as I am tied to them till next year anyway... just want to make sure we are not a straight NO!!

Answering your specific question, yes your figures do add up.
Your current lender will probably be happy for you to MEW your mortgage as the LTV is still very good (approx 71%).

You will have no problems getting a mortgage, however you may have to pay some costs to do this seeing as you are tied to your lender till next year.