Equity loan.

SarahP123

So I own my home straight out after having it signed over to me from a parent, the house is worth around £95,000 I have a really poor credit score after checking today I owe just under £2000 in different accounts from catalogues and defaulted credit cards.
I need to make home improvements like a new kitchen and bathroom and would like to pay off anything I already owe out.
I've been turned down today by Norton finance for a equity loan on the house for £40,000. What can I do now which won't take too much time as I really do need the home improvements asap.

dealer_wins

With that credit record, IF you have sufficient income (£15K or more annual salary) with a stable employment history, you may get a secured loan through a specialist broker. But expect a high interest rate and £2000+ fee to pay!

I would start saving up as much as you can, £300 a month and you could have enough within a year or 2 without needing to borrow.

jonesMUFCforever

To spend over £38k on a new kitchen and bathroom, on what seems a smallish house (due to valuation of £95k) seems over the top to me?
Cut your cloth to what you can afford is the only advice I can give.

Xbigman

You have luckily been given a house so you have no rent or mortgage. You are already in debt that you have defaulted on so your first thought is to take out a big loan to clear those debts and do the house up. This is the start of a slippery slope that often ends in tears. Pay off the 2k and then start doing the house up slowly a bit at a time using the money you would have used repaying the 40k.

And I agree that 40k for a kitchen and bathroom is high. 10k is more like it. My advice is don't even borrow the 10k, it's not worth it.

I think Norton finance have done you a favour.



Darren

Herzlos

You can get a bathroom done for well under £2k and a kitchen for under £5k. What do you actually need to do with them?


If you're struggling to clear off £2k in other debt, then taking on another £38k is madness.


If you do actually need to upgrade the kitchen and bathroom right now, then a mortgage might be the better way to go. BUT if they aren't dangerous and still work, I'd delay the work a bit longer until you're in better financial shape or ideally can afford to pay for the work out of savings.


The house I'm in needed both modernised, but I did the bathroom in 2 stages about 4 years in, and the kitchen after 10 years once the last drawer fell apart and I couldn't put it off.

Dobbibill

Address the cause of the £2k debt, understand why and how it happened to make sure it doesn't happen again.

Without rent/mortgage to pay you are in a fortunate position. Use this opportunity to pay off your debts monthly - highest APR is generally the preferred order.

Put the amount away that it would have cost you if you had to pay rent/mortgage and use that to do the renovations.

Also now you are a home owner, an emergency fund and/or house maintenance savings are a must. A new roof, boiler, white goods all add up and are your responsibility.

Congrats on being a home owner.

foxy-stoat

I do hope you dont manage to get the loan - try and pay back what you owe, you dont have rent or mortgage to pay so your winning!

Clive_Woody

If you're struggling to repay the £2000 and have defaulted on cards, how do you plan on repaying a £40,000 loan?

SarahP123

You have helped so much I've literally looked in to everything today paid off two debts give myself a 12 month plan I can be debt free within a year with a new bathroom by being sensible. Thank you all for your advice I was being ridiculous with my expectations. A new kitchen can come in time and in the end my house is my own. Thanks again.

paye

Well done for thinking it through again. :j

I also wanted to take out a loan to do up my kitchen (£25k), which I could of easily afforded the repayment, so I applied and got accepted.

The same day the money cleared in my account I started having second thoughts and transferred the money straight back and cancelled the loan agreement.

I decided I would rather wait an extra 12 months, save up and then start, this way I won't have any sleepless nights.

Point of the post is, do the house up slowly when you have the money, Your house won't run away.

Herzlos

SarahP123 wrote: »

You have helped so much I've literally looked in to everything today paid off two debts give myself a 12 month plan I can be debt free within a year with a new bathroom by being sensible. Thank you all for your advice I was being ridiculous with my expectations. A new kitchen can come in time and in the end my house is my own. Thanks again.

This is probably the most sensible post I've ever seen on here.