Consolidating debt into mortgage

CSL0183

Thanks for the feedback everyone. 

I found out that if I go through a specialist mortgage advisor the 10 year debt consolidation requirement is bypassed and that the term can match my existing one. 

The reason being there is a lot of extra work that the mortgage advisor has to go through that in house Halifax mortgage advisors would not go through (I guess the independent take the risk and the liability). 

So to say I am happy is an understatement, it’s all going along smoothly so far. No need to switch lender, incur an ERC, instruct solicitors etc etc. In addition to that, because I can open up the term to say 20yrs, I can pull more out if required up to the 85% LTV

I’ve found a new appreciation for independent mortgage advisors for sure. Didn’t really appreciate that they had access to deals that the general public did not. 

CSL0183

getmore4less said:

The change of LTV on your original loan should get a lower rate for a few months covering some of the ERC if you switch lender.

What are Halifax terms on additional borrowing for property development.

Can you structure some of the extra under that umbrella.

I had purchased the property with a 15% deposit so at the time of my renovations we only had around 20% equity. Approaching Halifax for further lending was a no-go, they wouldn’t entertain lending money for development.

This left me no option but to get myself heavily in debt to fund the project. I found applying for 3 x £25K loans pretty much within half an hour of each other worked well. My partner done the same. I feel if we had stretched it out, we may not have got them all as I had an offer for a 4th £25k loan a day or two later and declined it at the time but strangely enough when I went to re-enquire about it a month later it was withdrawn. Credit score dropped by about 100 points or so. I was 999 on Experian, it dropped to 895, it is now back up to 945. 

We have a high enough income that the payments on the loans were manageable and we still had a decent level of disposable income. (Well enough to pay all the bills and live as normal) Covid probably helped as it saved us £10-15k on expensive holidays and WFH meant reduced travel and work related costs. 

Our approach is not for everyone and it’s been stressful (The build that is) but we are at the end of it now and there’s light at the end of the tunnel with getting this debt cleared. 

getmore4less

Loads go down the renovation route with extra borrowing then the refinance at the end.

As long as it stays affordable even with higher rates it can work just costs more. 

because I can open up the term to say 20yrs, I can pull more out if required up to the 85% LTV

I think you said £195k + £125k = £320k on £450k that's  71%

With Halifax LTV break points at  with remortgage** rate 5y £999fee

Ouch they put their rates up yesterday
60%, £270k 2.07%
75%, £337k 2.26%
80%, £360k 2.42%
85%  £382k 2.82%

I would be careful going over 75% because you renewal in Oct will get effected.

** existing customer rates are custom what rates are you getting offered for these LTV options on that extra borrowing?

CSL0183

getmore4less said:

Loads go down the renovation route with extra borrowing then the refinance at the end.

As long as it stays affordable even with higher rates it can work just costs more. 

because I can open up the term to say 20yrs, I can pull more out if required up to the 85% LTV

I think you said £195k + £125k = £320k on £450k that's  71%

With Halifax LTV break points at  with remortgage** rate 5y £999fee

Ouch they put their rates up yesterday
60%, £270k 2.07%
75%, £337k 2.26%
80%, £360k 2.42%
85%  £382k 2.82%

I would be careful going over 75% because you renewal in Oct will get effected.

** existing customer rates are custom what rates are you getting offered for these LTV options on that extra borrowing?

Yes, agreed. We need to do a bit of landscaping work on the gardens and ideally we would like a new driveway too so the idea was to take out more up to 80-85% band. The rate we were quoted for this LTV band yesterday was 2.88% but you are right above, if we kept it where it is just to pay the debts the interest rate is more attractive below that 75%. It’s something to ponder, if I can convince my wife to hold out on the further works then as you mention, we will benefit from this come November when the main mortgage is needing refinanced and we can keep the rate sensible. There are cheaper options available to us on the market as pointed out by our broker but taking everything into account (ERC, legal, timelines, debt consolidation etc) we will likely stay with Halifax. The other option is just to take out a further personal loan once we have the remortgage and just pay for the driveway / landscaping from that and then pay for that over the next 5yrs (as opposed to 20). This way it keeps LTV below the 75%

Thanks for all the feedback, it’s been more than helpful.