Turned down for additional borrowing

Jamesp31_2

Unless I win the lottery I wouldnt be able to pay the credit card off fast.  Extending up into the loft I dont think is an option, dont think theres the space.  I will look into 2nd charge mortgages.  

bobster2

Jamesp31_2 said:

Unless I win the lottery I wouldnt be able to pay the credit card off fast.  Extending up into the loft I dont think is an option, dont think theres the space.  I will look into 2nd charge mortgages.  

Repayments on an additional £115,000 of lending are going to be at least £600 per month on top of your existing mortgage payments (or about £400 per month interest only).

So presumably you've worked out that you've got a spare £400-600 per month?

Sncjw

What if the works went over budget how would you fund if. Could you not just look for a property that has four bedrooms. An extra 115k for one bedroom is a lot of money. Maybe the lender doesn't see that value of adding 115k to the property. They may think it won't be worth more than 115k extra. 

mi-key

I think the LTV could be your main problem. From the lenders point of view they can be thinking what happens if for some reason you don't complete the work ( so no extra value added to the house, and in fact could damage the value ), and can't make the mortgage payments and they have to repossess.

You owe them £260K on a house that 'may' be worth £290K, but more likely they would have to sell it for less than £260K to get the money back, and with incomplete building works could be as low as £200K at auction.

Of course they always look at the worst possible scenario to cover themselves. 

amnblog

We don't know if there is anything else in the background pulling down affordability like:

Car Finance
Student Loans
Children or maintenance
Short mortgage term

If not you might be able to borrow another £60,000, but an extra £115,000 is not happening.

A good Broker will put you right.

dimbo61

As others have pointed out an extra £115,000 of borrowing would cost about £600 a month so for the time being you should try and clear the credit card  debt

Hopefully in 10/12 months you will have cleared that debt.
Look at what you have now and try to make best use of the rooms in your home.

bamgbost

Are you sure they let you borrow up to 90% LTV?
When we did similar with Halifax it was up to 75% LTV.

AS others have said, perhaps they have undervalued your home... or dont see the benefit of borrow to such a high LTV.

Jamesp31_2

amnblog said:

We don't know if there is anything else in the background pulling down affordability like:

Car Finance
Student Loans
Children or maintenance
Short mortgage term

If not you might be able to borrow another £60,000, but an extra £115,000 is not happening.

A good Broker will put you right.

Theres none of the above, just the credit card debt.  Thanks all for your advice so far.  I will be ringing them again on Tuesday because I just don't think theres something right.  If plans need to be reigned in fair enough but what they are offering is peanuts.  If no joy I will talk to a broker.

Thanks all

bobster2

Jamesp31_2 said:

amnblog said:

We don't know if there is anything else in the background pulling down affordability like:

Car Finance
Student Loans
Children or maintenance
Short mortgage term

If not you might be able to borrow another £60,000, but an extra £115,000 is not happening.

A good Broker will put you right.

Theres none of the above, just the credit card debt.  Thanks all for your advice so far.  I will be ringing them again on Tuesday because I just don't think theres something right.  If plans need to be reigned in fair enough but what they are offering is peanuts.  If no joy I will talk to a broker.

Thanks all

As people have said - it's probably just the 90% LTV at 4.8x joint salary that is likely the problem.

Also are you even sure about that LTV? Based on some numbers you posted in a previous thread you seemed to be suggesting the property was worth about £260,000 a year ago. Why would you think it's increased by about 11% in value during the past year? UK average was a fall about about 1% from Q1 2022 to Q1 2023.