Release equity from properties to pay off credit cards

johnwest

Hi,

I am new here and came as I pretty much exhausted all possible solutions I could think off.

Need advise and maybe one you can come up with something I haven't so far.

I have 3 properties in UK. All with mortgage and each with at least 100k equity.

During the covid fraud I had extra expenses and was using credit cards which I planned to pay off when I remortgage with extra borrowing.

My credit file is OK. Used to be excellent, but it did drop due to large amount of debt on credit cards.

When I came to remortgage at the end of last month I got hit by reality in form of utterly illogical decisions on banks part.

I was refused extra borrowing because of the credit card debt. None of the banks I contacted wouldn't take into account that the purpose of extra borrowing is to pay off the cards and still included cards debt when looked at my credit file and included cards bills in affordability calculations.

I have been told by couple banks that extra borrowing wont be a problem at all when i pay off the cards. Even got offer from Net West of nearly 80k on just one of the properties, but again, on condition of paying off the cards first.

Since I have all the securities required I looked around for private loan of around 40k for period of few months. Its just so my credit file updates and I can get extra borrowing and then pay off the private loan.

I offered formal contract, with lawyer involved if demanded (not required in UK) and even adding lenders name on deeds of one of the properties as co-owner of agreed percentage.

I don't know many people able to lend around 40k. The couple of people I do know still prefer to keep losing money on savings account (inflation is higher than interest!) instead of helping me out and actually earning some interest on loan given to me.

Personal loan is by far the best solution as it does not leave any mark on credit file and that can be important when applying for extra borrowing.

Selling one of the properties has humongous downsides:

1) they have two purposes - when I leave UK for retirement they supposed to provide income

2) they are form of security for family in case I kick the bucket

3) I will need to sell it fast, that means cash buyer companies, that means I can get no more than 80% market value, that means at least 50k loss

Secured loans are more expensive, but I could live with it if I can get one. Due to cards repayment costs I have been turned down by few brokers basing on affordability. They to do not consider that sole purpose of the extra borrowing is to pay off the cards and still include them in calculations what results of me failing affordability nonsense.

I have contacted several debt advice organizations, but they all want to put me in IVA for what I wouldn't even qualify. I am far from being insolvent.

Now I am in vicious circle - need extra borrowing to pay off the cards, but cant get extra borrowing because of the cards.

If don't sort this out soon I will not have enough cash to pay all the monthly bills. The cards cost a lot money every month.

If I can get extra borrowing I will be perfectly fine even when I include the additional mortgage cost due to extra borrowing.

Last resort are loan sharks, but I would rather not deal with any of them as many are criminals with questionable code of conduct ...

I do hope some of you have any ideas I don't have to risk dealing with loan sharks.

MorningcoffeeIV

Selling a property is probably your best bet, assuming you've already cut your costs to the bone.

You're unlikely to find any one unhinged enough to provide a personal loan. They'd rather get moderate interest on a savings account than risk losing the lot.

Using a loan shark would also be insane. If you can't afford your current debt, you can't the rate provided by Knuckles McGee. You may also still need use of your limbs for future life.

You don't need to sell to a house buying company You just price it to sell quickly.

CliveOfIndia

johnwest said:

When I came to remortgage at the end of last month I got hit by reality in form of utterly illogical decisions on banks part.

I was refused extra borrowing because of the credit card debt. None of the banks I contacted wouldn't take into account that the purpose of extra borrowing is to pay off the cards and still included cards debt when looked at my credit file and included cards bills in affordability calculations.

This is one of the biggest issues with consolidation loans.  There is no way a lender can force you to use the loan to repay the cards, so they have to assume that the loan will be in addition to, not instead of, your existing debt.  This is true in every consolidation loan scenario for all lenders.

johnwest said:

Personal loan is by far the best solution as it does not leave any mark on credit file and that can be important when applying for extra borrowing

A personal loan will be recorded on your credit file, I'm not sure what leads you to believe that it won't be.  It is, after all, another line of credit.

As MorningCoffee says, selling a property is going to be your best bet.  Unless you're in a position whereby you're able to make significant cutbacks to your outgoings (or increase your income) in order to clear the debts.

johnwest said:

Last resort are loan sharks, but I would rather not deal with any of them as many all are criminals with questionable code of conduct ...

Corrected that for you.  I can scarcely believe you're even entertaining the notion to be honest - but please, put that idea out of your head immediately.  Unless you have a burning desire to become part of a bridge support for the next motorway construction project near you.

Grumpelstiltskin

'I have contacted several debt advice organizations, but they all want to put me in IVA for what I wouldn't even qualify. I am far from being insolvent.'

Appears not to have been debt charities you have contacted but IVA selling companies who try to hide behind 'advice'

Mind you the advice to sell one of the properties is probably the best no one will want to lend you even more money.

DiamondLil

johnwest said:

Since I have all the securities required I looked around for private loan of around 40k for period of few months. Its just so my credit file updates and I can get extra borrowing and then pay off the private loan.

I offered formal contract, with lawyer involved if demanded (not required in UK) and even adding lenders name on deeds of one of the properties as co-owner of agreed percentage.

I don't know many people able to lend around 40k. The couple of people I do know still prefer to keep losing money on savings account (inflation is higher than interest!) instead of helping me out and actually earning some interest on loan given to me.

Personal loan is by far the best solution as it does not leave any mark on credit file and that can be important when applying for extra borrowing.

Assuming you are talking about a private arrangement with people who know you, are you really surprised ?

IainHL

CliveOfIndia said:

johnwest said:

Personal loan is by far the best solution as it does not leave any mark on credit file and that can be important when applying for extra borrowing

A personal loan will be recorded on your credit file, I'm not sure what leads you to believe that it won't be.  It is, after all, another line of credit.

I think the OP means what can best be described as a "person to person" loan, that is one from a friend or acquaintance, not a personal loan in the normally accepted use of the term (unsecured loan from a financial institution).

BikingBud

johnwest said:

Hi,

I am new here and came as I pretty much exhausted all possible solutions I could think off.

Need advise and maybe one you can come up with something I haven't so far.

I have 3 properties in UK. All with mortgage and each with at least 100k equity.

During the covid fraud I had extra expenses and was using credit cards which I planned to pay off when I remortgage with extra borrowing. 

Not sure what the covid fraud is but it seems you lived beyond your means and now the piper needs paying?

Selling one of the properties has humongous downsides:

1) they have two purposes - when I leave UK for retirement they supposed to provide income

2) they are form of security for family in case I kick the bucket

3) I will need to sell it fast, that means cash buyer companies, that means I can get no more than 80% market value, that means at least 50k loss

Now I am in vicious circle - need extra borrowing to pay off the cards, but cant get extra borrowing because of the cards.

If don't sort this out soon I will not have enough cash to pay all the monthly bills. The cards cost a lot money every month.

If I can get extra borrowing I will be perfectly fine even when I include the additional mortgage cost due to extra borrowing.

I do hope some of you have any ideas I don't have to risk dealing with loan sharks.

A form of security should you need to pay your debts? Like now.

A vicious circle? It seems like the way a gambler would rationalise their habit.

Extra borrowing against what may currently be a depreciating asset?

With a habit of overspending and a limited perspective of the logical and entirely rational decisions of the banks?

We don't know you and the above may do you a disservice but I expect your friends do know you, very well if you are able to discus personal loans with them, and I can see from your post what their concerns may be.  

theoretica

Sell a property - then you will be debt free and can start again with increasing mortgages and buying a new property.  I don't suppose your car is worth enough to sell and make enough of a dent in your credit cards to allow the mortgage borrowing you want?

Tucosalamanca

johnwest said:

Just to summarize. I need to find a lender, 40k, for 3 months or less.

I offer good interest, have securities and will pay for lawyer to draft a contract.

This comes across as an advertisement / classified ad.

Just saying

MorningcoffeeIV

johnwest said:

- inhinged private loans - keeping money in savings account at 3-5% interest when inflation is 5-10% is being unhinged. Giving private loan with legal contract and security in form of property is sign of having a brain.

No. It's the sign of a gambler. Professional lenders know you're too high risk - you're looking for a amateur without a brain.

A contract is of no use if you won't or can't pay, and 5% interest won't cover their legal costs.

People with 40k spare tend not to be stupid.

BikingBud

johnwest said:

CliveOfIndia, my apologies, I meant "private loan" and not "personal loan".

Covid fraud - whole plethora of actions taken by government consisting of paying billions of OUR money to private companies for ineffective (now proven, EU court proceedings+other sources) experimental genotherapy treatment and shutting the economy down for no good reason (Covid is just another flu) and causing recession which costs all of us arm and a leg. Illegally forcing citizens to take experimental treatment and causing countless deaths via this treatment and lack of healthcare is another matter.

To other commenters regarding :

- living above means,overspending. Well, in 10 years I have turned 5k of cash in 3 UK properties (with mortgages for half the value) + abroad farm owned outright worth over 1mil. Had no help whatsoever. Don't think I could have achieved it by overspending.

- security for the loan - well over 300k in equity.

- inhinged private loans - keeping money in savings account at 3-5% interest when inflation is 5-10% is being unhinged. Giving private loan with legal contract and security in form of property is sign of having a brain.

Sale of property. Estate agency is no option. Sale of property in UK takes AGES. To attract cash buyer in order to sell it quickly I would have to down-price it to 80% market value anyway, so the cash buying companies are better option than estate agencies. At least 50k loss anyway.

Biggest problem is that I do not want to sell any property. They supposed to provide income when i retire in couple years. Pensions are waste of time.

Bank have offered nearly 80k of extra borrowing on just one of the properties under condition I pay off the cards first. Need extra borrowing to pay off the cards and need to pay off the cards in order to get extra borrowing. Hence the vicious circle.

Just to summarize. I need to find a lender, 40k, for 3 months or less.

I offer good interest, have securities and will pay for lawyer to draft a contract.

No means to service a debt. What was the plan as you have luckily managed to turn 5k of cash into what, £350K of debt? 

40k on credit? If adding to debt is the desired outcome then you are overspending. Some may call it leveraging.

A perception of high value for illiquid assets. Some may call it over leveraged. 

Forced to conduct sale of assets at "reduced" value to generate cash flow. Some may call it a fire sale.

Expecting others to bail you out of a deteriorating situation. Some may call it blind optimism.

Always someone else's fault. Clamouring to disperse blame, Gov and Covid, for poor personal planning and lack of effective financial management. Some may call it accountability.

Seems like 2008 all over again. 

Or perhaps a plan to own a football club

Try dragon's den I'm sure they'll love this.