Borrowing against equity

easty

I bought my place for £133k about 13 months ago. It was an absolute bomb site, and I've spent c£20k getting it how I want it. Doing so meant I've taken on quite a bit of debt though.



However, I only owe £108k on the mortgage, and recently 3 houses on my street have sold for just over £170k each. None of which were in as good condition as mines is now.



I'm wondering how difficult it is to borrow money against the equity you have in your property, to pay the debts off (debt is about £18k, bank loan and credit cards, and I'm paying back at around £350 a month). I'd rather have them in one payment, spread over a longer time - attached to my mortgage would be ideal, but I'm not sure HSBC (my provider) would lend me enough.


I think the max HSBC would give me for a mortgage is around £120k (4 x my salary), which would only allow me to borrow £12k above what I owe. Frustrating slightly, given that I have potentially got £62k of equity in the property.


Any help/advice would be great

foxy-stoat

You maybe able to get 4.5 x salary - speak to a broker for options.

Also turning unsecured debt into secured over a longer period (you will pay more interest) is sometimes a bad idea.

easty

foxy-stoat wrote: »

You maybe able to get 4.5 x salary - speak to a broker for options.

Also turning unsecured debt into secured over a longer period (you will pay more interest) is sometimes a bad idea.

I'm not too concerned about paying off over a longer period. I'm only planning to stay in this house another 2-3 years, then move to something bigger. Whatever I borrow now, will be paid off in full when I sell.

Cscott139

have you spoken to HSBC? I am assuming you will be tied in and have penalties for leaving early.

easty

Cscott139 wrote: »

have you spoken to HSBC? I am assuming you will be tied in and have penalties for leaving early.

Not yet, but I will. I'd rather keep the mortgage with HSBC, port it, and avoid the fees, but the fees will only be £500-600 worst case.

Retired_Mortgage_Adviser

So effectively you want to remortgage along with consolidating your debt as part of the process.

House value 170k
Income 30k
Current outstanding 108k
Required total mortgage 126k which is 75% LTV and 4.2x income.

On the face of it, assuming your valuation holds, assuming no other factors (dependents, remaining debt payments after consolidation, etc), it does not appear very complicated.

Have you talked to HSBC? Where did you get the 4x ceiling from? Afaik the max LTI up to 90% LTV is 4.75x which drops to 4.49x for 95% LTV.

If HSBC is being difficult, you can always talk to a broker who can assess your options along with what's available with HSBC.

easty

Retired_Mortgage_Adviser wrote: »

So effectively you want to remortgage along with consolidating your debt as part of the process.

House value 170k
Income 30k
Current outstanding 108k
Required total mortgage 126k which is 75% LTV and 4.2x income.

On the face of it, assuming your valuation holds, assuming no other factors (dependents, remaining debt payments after consolidation, etc), it does not appear very complicated.

Have you talked to HSBC? Where did you get the 4x ceiling from? Afaik the max LTI up to 90% LTV is 4.75x which drops to 4.49x for 95% LTV.

If HSBC is being difficult, you can always talk to a broker who can assess your options along with what's available with HSBC.

Thats basically it yeah.


The home valuation will probably only be £160k though, thats what's been happening with others on my street, then they're selling for £170k.


I don't actually know where I got the 4x ceiling from, I prob heard it or read it ages ago.


Thank you for your post. Very helpful.

foxy-stoat

easty wrote: »

Thats basically it yeah.


The home valuation will probably only be £160k though, thats what's been happening with others on my street, then they're selling for £170k.


I don't actually know where I got the 4x ceiling from, I prob heard it or read it ages ago.


Thank you for your post. Very helpful.

The issue I had when I was thinking about the same was the lender didn't accept that my property had gone up in value, I paid £275,000 for it 2 years ago and they thought it was worth £268,000 - based on their computers figures. If I wanted to challenge their figure I would have to of paid for valuation and no guarantee they would lend me anything extra if it was valued more, to pay off debt. I sold it for £300,000 in the end a few months later and moved in the end. Just something to think about.

easty

foxy-stoat wrote: »

The issue I had when I was thinking about the same was the lender didn't accept that my property had gone up in value, I paid £275,000 for it 2 years ago and they thought it was worth £268,000 - based on their computers figures. If I wanted to challenge their figure I would have to of paid for valuation and no guarantee they would lend me anything extra if it was valued more, to pay off debt. I sold it for £300,000 in the end a few months later and moved in the end. Just something to think about.

Who was your lender?