Best way of borrowing £40,000

Crumble_

I’m not having a cheap banger but we are doing the decorating and any jobs we can do that don’t need signing off / qualified to do. Like the other person said, I can afford it monthly not an issue, it’s the initial lump sum outlay I don’t have.

It’s all well and good saying do it in stages, but I don’t want to be living in a building site for months on end

dawyldthing

But you'll be paying more in interest for doing it quickly. You'd be better doing either or not both.

Crumble_

That’s fine as I can pay it off quicker monthly.

I’m aware secured loans have a penalty fee attatched if you pay it off before the time stated? Does anyone know how much this is? They are obviously cheaper to get but I doubt I’d have enough equity in 1 house to secure it against the property. I would have enough split over the two houses but with way more risk involved I know.

Pixie5740

Yes there can be a penalty fee for repaying secured loans early. For loans over £25k there is no upper limit as to how much the lender can charge you in early redemption fees.

Secured loans also tend to have a variable interest rate rather than a fixed interest rate and from the threads on this board the rates only appear to vary one way and that's up.

You will be limited by the combined LTV of the mortgage and the secured loans. 70% to 75% is usual but I think some lenders such as Optimum Credit (not recommending them by the way) will go up to 95% LTV. However, the higher the LTV the higher the interest rate so then you're back to two smaller, unsecured, personal loans being less expensive.

foxy-stoat

Crumble_ wrote: »

That’s fine as I can pay it off quicker monthly.

I’m aware secured loans have a penalty fee attatched if you pay it off before the time stated? Does anyone know how much this is? They are obviously cheaper to get but I doubt I’d have enough equity in 1 house to secure it against the property. I would have enough split over the two houses but with way more risk involved I know.

Stay away from secured loans - your better off getting a loan for £20K (if you can get one) once you have completed, and a few credit cards for the other £20K - if you do the 0% shuffle and keep on top of the repayments you may be ok and wont cost you too much.

Crumble_

95% chance of approval with many companies offering £25k which is good. I also bank with first direct and they offer £30k for 3.3%.

I will probably go smaller and put the rest on cards though for 0%. I didn’t like the look of secured loans and the feedback has swayed me to stay away. Thank you.

Is there anyway of asking for a credit limit on the credit cards?

DrEskimo

What's the value of the car you are financing?

If I have read your post correctly, I understand you are not borrowing to buy a car, but borrowing to put a deposit to take out another load of secured finance on the car (presumably PCP?).

With the greatest respect, this is an awful lot of debt to take on. I take it from your post earlier you have no savings now (as it was used to pay the fees to secure the second property), so what contingency have you got in place to service presumably the mortgage on your property, the mortgage on this second property, the high loan for the renovations, deposit and present, and the car payment..?

I agree with above. Personally I would forget the car and present and concentrate on the second house first. It's also not immediately clear why additional borrowing on the mortgage wasn't done if you knew you were buying it to renovate? Were you at the maximum amount you could borrow? I would have thought that would have been the easiest and most straightforward method...? It's what I did anyway!

MallyGirl

Crumble_ wrote: »

95% chance of approval with many companies offering £25k which is good. I also bank with first direct and they offer £30k for 3.3%.

I will probably go smaller and put the rest on cards though for 0%. I didn’t like the look of secured loans and the feedback has swayed me to stay away. Thank you.

Is there anyway of asking for a credit limit on the credit cards?

First Direct ask how what credit limit you want during the application but there is no guarantee that it is what you will get

Lungboy

Crumble_ wrote: »

As soon as the contracts have been exchanged then I will apply for the loan and the car finance.

You need to wait until after completion, not exchange. Banks have been known to do a final credit check before completion and any new undeclared borrowing could result in no mortgage.

Crumble_

Yeahp, didn’t know that. I thought as soon as contracts were exchanged I was ok. Cheers