Best way to borrow £40k?

vicker

I bought a house in May 22 with the view of doing much needed remedial/building work on it ASAP. At that time, the mortgage was happy to loan me an additional £60k when the work was ready to begin. 

Quotes done, builder appointed, planning granted...all took their time. Mortgage company are now only going to lend me an extra £14k. This is despite a £7k payrise in secure employment. Not happy. 

I'm now trying work out the cheapest way to raise £40k... I've put some of the less urgent work on hold, so £20k less needed.

Options available are

£40k loan from Bank of Ireland. 7.5% pa over 6 years (7.5% not guaranteed rate)

£14k mortgage additional borrowing 4.6% pa over 23 years

Money transfers from existing credit cards.

CC1: £7900 @ 5.99pa. No fee money transfer. Can apply to increase credit limit before doing the money transfer, so £7900 could increase. They say "We'll do checks to make sure you're eligible, but this won't affect your credit score"

CC2: £5000 @ 0% interest, 4.00 transfer fee.

CC3: £15k @ 25%pa, no fee money transfer. (Yes, I know this isn't a real option, but thought I'd include it)

I've been an avid stoozer in the past, so if I did money transfers, I'm not the sort of person to forget to get a new 0% deal at the end of a promotion.

I have no debt/loans besides the mortgage.

I want to get this right, as I don't want credit checks all over my file, stopping me get the next amount of borrowing. 

What combination of the above would you do? 

All thoughts welcome.

EssexHebridean

Specifically looking at the additional mortgage, have you worked out how much you can throw at it in overpayments within what the deal you are on allows to establish how long it would actually take you to clear that extra £14k? That would give you a clearer picture of the actual costs of using that route. 

Assume that your credit file is currently looking squeaky clean and delightful, and that eligibility checkers are showing you at high chance of acceptance for cards and loans? 

martinbainbridge1975

something to double check on what would be the repayments on the cards as they potentially may want 2-3%, on that basis repayments would be around £700.

have you queried why the mortgage offer has been changed or looked at any alternative mortgage lenders?

juggling credit cards could get messy and the way the market is, as people have said on other posts, there is no guarantee that when the offers finish that there will be a replacement available

enthusiasticsaver

I guess your mortgage provider has changed affordability criteria with mortgage rate increases recently?

I would think you would struggle to get £40k from Bank of Ireland if that is the case and certainly at a favourable rate. Would that be secured on the house? 

 Why have the mortgage company reduced the amount they will lend you? 

vicker

EssexHebridean said:

Specifically looking at the additional mortgage, have you worked out how much you can throw at it in overpayments within what the deal you are on allows to establish how long it would actually take you to clear that extra £14k? That would give you a clearer picture of the actual costs of using that route. 

Assume that your credit file is currently looking squeaky clean and delightful, and that eligibility checkers are showing you at high chance of acceptance for cards and loans? 

Indeed - the credit file is looking squeaky clean. High chance of acceptance across the board. 

I can comfortably chuck £1k a month at the total £40k debt. £1250 is doable, but a little more uncomfortable.

vicker

martinbainbridge1975 said:

something to double check on what would be the repayments on the cards as they potentially may want 2-3%

have you queried why the mortgage offer has been changed or looked at any alternative mortgage lenders?

1% repayment each month on cc

Offer went down due to the mortgage company updating their affordablility calculator due to the cost of living. My mortgage broker has calculated I should be loaned £28k, and can't understand what's going on either.

I asked her to look at other lenders, and whilst she found me a few which I could remortgage with if I stomached the ERC, the idea of paying 4% on my entire mortgage, rather than just £14k of borrowing, is not appealing. 

martinbainbridge1975

vicker said:

martinbainbridge1975 said:

something to double check on what would be the repayments on the cards as they potentially may want 2-3%

have you queried why the mortgage offer has been changed or looked at any alternative mortgage lenders?

1% repayment each month on cc

Offer went down due to the mortgage company updating their affordablility calculator due to the cost of living. My mortgage broker has calculated I should be loaned £28k, and can't understand what's going on either.

I asked her to look at other lenders, and whilst she found me a few which I could remortgage with if I stomached the ERC, the idea of paying 4% on my entire mortgage, rather than just £14k of borrowing, is not appealing. 

vicker said:

martinbainbridge1975 said:

something to double check on what would be the repayments on the cards as they potentially may want 2-3%

have you queried why the mortgage offer has been changed or looked at any alternative mortgage lenders?

1% repayment each month on cc

Offer went down due to the mortgage company updating their affordablility calculator due to the cost of living. My mortgage broker has calculated I should be loaned £28k, and can't understand what's going on either.

I asked her to look at other lenders, and whilst she found me a few which I could remortgage with if I stomached the ERC, the idea of paying 4% on my entire mortgage, rather than just £14k of borrowing, is not appealing. 

1% seems low, its usually 2.25 upwards 

I am CEMAP qualified but not been practicing for a good few years, one remark I had heard from contacts still in the industry was some lenders were basing their affordability on a stress test at 8.5% base rate, that may expaline some of the reason for the reduction in the amount offered

DullGreyGuy

vicker said:
I'm not the sort of person to forget to get a new 0% deal at the end of a promotion.

its not just about remembering... you also have to find banks to accept you which may be difficult with a large personal loan and 3 maxed out CCs etc

Paul_gorbo

It's all so complicated. Could you just give 40,000