Loan options for £60,000
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I am wondering if it would be possible for me to take out a loan in a few months time for home improvements costing £60,000 (loft conversion, move bathroom upstairs, kitchen, garden etc). The mortgage is £396,000 and our deposit was £80,000 (total house cost £475,000). We don’t have any further equity. Our joint income is £88,000, we have no other debts or dependents to pay for and good credit score. We intend to pay the loan off for a bit and then sell and clear it in one big money dump from the house sale.
Having a look online it seems we would not get approved?
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Get saving and do the work in stages. As your current borrowing reduces and the amount you need to borrow stops, you should have some options later on.
Save, get smaller loans and use 0% purchase credit cards. Likely need to scale back the amount of work, as getting into shed loads of debt is not without risk.
If you plan to do the work and then move, it is clearly not to improve your own enjoyment and use of the property.
If it is to add more value to the property than the works cost, that is far from guaranteed and IMO unlikely.
The extent of work you describe is significant and I suspect will cost more than £60k.
You are already at 4.5 times salary borrowing and if you borrow another £60k, you will be taking the LTV to 95%.
It may be worth reviewing the plans and considering what your plan would be if anything went awry, either with the construction work, with planning / party wall agreements, total external factors (inflation / mortgage rate increases), or local / personal external factors (job security / illness).
The worst case scenario here would be that you borrow, get half way through the property work and then have to abort the project for any reason. You would then have a house in a state of disrepair worth less than the equity (after the additional loans are considered) plus a very high debt to service.
Of course, and we all hope, it is possible that nothing goes wrong, but you need to have considered the worst case scenario and recovery plan from there.