Re-mortgage time… but a worsened credit profile

bamgbost

Hi

 Was on here 2 years ago…. And with the great advice managed to get a mortgage. Now I’m back… as it was a 2 year deal. And will be due in 4 months’ time.

 During the last 2 years, we have taken a few loans for a car, and house updates, etc. Also, have managed to max out our credit cards too!

This now means that our credit profile is average / not great, as we have “high credit utilisation”.

 1)Would it be possible to re-mortgage with our current lender or another relatively easily? Current lender is Halifax. Say approx. £285k mortgage @ 80% LTV

2) Are we able to take some equity out and use that to consolidate some or all of the debts?  Say approx. £315k mortgage @ 85% LTV

 How likely is it that we can do either of these 2. Preferably option 2.

Thrugelmir

New product with your current lender is not a remortgage. Just a switch of product. Look on online at the products that the Halifax will offer you. If you proceed on an advised basis , i.e. make telephone contact, then lenders are required to assess affordability etc based on your circumstances as they are now. If you wish to borrow additional sums treat this as a seperate exercise once your product switch is complete. A homeowner loan is a potential option to release equity. 

A general caveat is never to consolidate debt into ones mortgage. Doesn't address the underlying issues. While your outgoings will reduce in the short term. Statistically you are likely to simply rebuild debts again in the future. All down to human nature and our individual genes. Being disciplined as to how you manage your money will leave a permanent impression on you. 

foxy-stoat

So you have managed to rack up £30,000 of debt in 2 years since getting your mortgage?  You should really just apply for another fixed rate with the same lender, they may not even run a credit search.

Then tackle your debts, stop spending, make a monthly budget and stick to it.  Come back in 2 more years and ask about option 2 then, hopefully you would of reduced your unsecured borrowing a bit by then.

ACG

If you remain with halifax as is, it would just be a product switch and no further underwriting would be done.
If you switch lenders it will be underwriting again, it may not be as thorough as the original application but it will have to go back in front of an underwriter.

It will be the same as above if you decide to borrow more with Halifax or a new lender. 

Theoretically all are possible however, but some lenders will make a bigger deal of the debt issues than others. If you want an easier option but not quite as cheap, you could switch products with halifax and then do a secured loan for the extra. Secured loans are normally a little more expensive than a mortgage, but the underwriting is easier/quicker. 

bamgbost

Ok. Thanks for the responses.

 If I have understood correctly…

 For my Q1 – I can stay with Halifax and “switch” to another product, and just continue with another mortgage product with no further credit check, etc.

If that’s the case. That sounds like the easiest option really & safest based on my credit history.

 

And if I still want money, then take out a separate secured homeowners loan with the Halifax too?  This would be both cheaper in the long run, and more likely to be accepted, than my proposed Q2 above?

ACG

The secured loan would be with a new lender and at a higher rate than Halifax would offer. But the underwriting on a secured loan would likely be easier to pass than it would be to take out a further advance with Halifax or remortgage everything to a new lender.

Options are:
1) Switch lenders for the full amount (current balance + additional borrowing) - Likely to be the cheapest. 
2) Switch products with Halifax and get a further advance with them - Likely to be middle ground option between cheapest and easiest as it will still need to go back through underwriting for the extra money. 
3) Switch products with Halifax and do a secured loan with a secured loan lender. - Probably the most expensive, but probably the easiest. 

bamgbost

thanks!!!

bamgbost

I think Option 3 above would be the best.

And safest.in terms of securing a new mortgage deal.

Thanks for the advice...

kingstreet

You don't appear to have the equity to look at capital raising if you are currently at 80% in a property market where your value might be lower than you expect.

bamgbost

Hi Kingstreet... are you basically saying options 1 & 2 were not an option?

dimbo61

You need to live and breath this website.
Every tip and way to save money !
With lockdown you should be spending a lot less money each week.
Spend the next 2 years paying down the debt and building up the emergency fund .