Borrowing more in current climate?

IvyFlood

How likely is it we'll be able to borrow more when we come to remortgage in the current climate?

Current 5yf ends in September and we'll owe about 135K with 18 years remaining. We have a LTV of 56%. We'd like to borrow 10k more to do some renovations which we'll have to extend the term, possibly to 30 years. I'm hoping we'll be able to reduce the term in the future depending on what happens.

Our monthly repayment is £823 which to be honest we'd probably have to up the term anyway to keep it at that even if we didn't have the intention to borrow more. Otherwise we'd have no savings. I'm just not sure what our chances are of borrowing more or if we even should!

EDIT: We have a joint income of 52.7K and we are 36 & 39 with no debt other than the mortgage

Wonka_2

Others will comment more but you'll probably need to add details on salaries/income i.e. what multiplier of them is £145k, significant outgoings/debt that might impact on that, and ages i.e. will 30yrs push you beyond retirement age ?

IvyFlood

Wonka_2 said:

Others will comment more but you'll probably need to add details on salaries/income i.e. what multiplier of them is £145k, significant outgoings/debt that might impact on that, and ages i.e. will 30yrs push you beyond retirement age ?

Apologies, I've added that now. Hubby was adamant he didn't want to still be paying mortgage into his retirement which I understand and agree with, but I was under the impression we may be able to reduce the term in the future if we can overpay or depending on what the climate is at the time. I also think what's the point in waiting to enjoy a home once you're retired.

K_S

IvyFlood said:

How likely is it we'll be able to borrow more when we come to remortgage in the current climate?

Current 5yf ends in September and we'll owe about 135K with 18 years remaining. We have a LTV of 56%. We'd like to borrow 10k more to do some renovations which we'll have to extend the term, possibly to 30 years. I'm hoping we'll be able to reduce the term in the future depending on what happens.

Our monthly repayment is £823 which to be honest we'd probably have to up the term anyway to keep it at that even if we didn't have the intention to borrow more. Otherwise we'd have no savings. I'm just not sure what our chances are of borrowing more or if we even should!

EDIT: We have a joint income of 52.7K and we are 36 & 39 with no debt other than the mortgage

@ivyflood Just play around with a few lender calculators to see what kind of borrowing figures it throws up. You'll get a rough idea that way.
https://www.halifax-intermediaries.co.uk/tools-calculators/mortgage-affordability-calculator.html
https://online.accordmortgages.com/public/mortgages/quick_enquiry.do

MFWannabe

Can I ask why you’d want to increase mortgage by 10k rather than just get a personal loan? 

Loan wouldn’t be secured on property and you wouldn’t have to extend the mortgage term by so much 

housebuyer143

You can extend past retirement but lenders then want to see your viable repayment strategy such as pension etc. Keeping it under retirement age is easier. 
I see no reason you can't borrow more though.

K_S

housebuyer143 said:

You can extend past retirement but lenders then want to see your viable repayment strategy such as pension etc.

@housebuyer143 There's a bit of nuance to this so I'll just expand a bit on this for the benefit of others who may come across this thread.

With respect to lending into retirement based on current income only, lenders fall into a few categories -

1. Max term up to lower of retirement age or 70
2. Max term up to lower of retirement age or 75
3. Max term up to lower of retirement age or 80
4. Max retirement age of 70, term up to 75 based on evidence of current pension contributions (pension projections don't matter, just deductions on payslip will suffice)
5. Etc.

There are criteria to the above - plausibility, current age, how far from retirement, etc. etc. but on the whole there is quite a bit of flexibility when it comes to how far a term can be stretched if you have access to a decent spectrum of mainstream lenders.

IvyFlood

MFWannabe said:

Can I ask why you’d want to increase mortgage by 10k rather than just get a personal loan? 

Loan wouldn’t be secured on property and you wouldn’t have to extend the mortgage term by so much 

In all honesty we just hadn't considered it. Wasn't sure if you could have a personal loan on top of a mortgage? But now you mentioned it I did a bit of research and it may well be an avenue we go down.

MattMattMattUK

IvyFlood said:

How likely is it we'll be able to borrow more when we come to remortgage in the current climate?

Current 5yf ends in September and we'll owe about 135K with 18 years remaining. We have a LTV of 56%. We'd like to borrow 10k more to do some renovations which we'll have to extend the term, possibly to 30 years. I'm hoping we'll be able to reduce the term in the future depending on what happens.

Our monthly repayment is £823 which to be honest we'd probably have to up the term anyway to keep it at that even if we didn't have the intention to borrow more. Otherwise we'd have no savings. I'm just not sure what our chances are of borrowing more or if we even should!

EDIT: We have a joint income of 52.7K and we are 36 & 39 with no debt other than the mortgage

The biggest factor here might be that you are talking about only borrowing an additional £10k, but you are going to nearly double the term, that would indicate something is going wrong financially.
Between the two of you you are taking home £3,656 pcm (less any pension contributions).
£135k over 18 years at 4.5% would mean repayments of £913 pcm
£145k over 18 years at 4.5% would mean repayments of £981 pcm
£145k over 30 years at 4.5% would mean repayments of £731 pcm, however you would pay an additional £52,612 in interest over the term. 
Lenders are slightly sceptical of additional borrowing at the moment, that, combined with you wanting to increase the term significantly might be a warning sign to them in itself, they may lend you the additional and extend the term, but in my opinion it would be far from advisable for you to do both, borrow the extra £10k if you can, but do not extend the term.

IvyFlood

MattMattMattUK said:

IvyFlood said:

How likely is it we'll be able to borrow more when we come to remortgage in the current climate?

Current 5yf ends in September and we'll owe about 135K with 18 years remaining. We have a LTV of 56%. We'd like to borrow 10k more to do some renovations which we'll have to extend the term, possibly to 30 years. I'm hoping we'll be able to reduce the term in the future depending on what happens.

Our monthly repayment is £823 which to be honest we'd probably have to up the term anyway to keep it at that even if we didn't have the intention to borrow more. Otherwise we'd have no savings. I'm just not sure what our chances are of borrowing more or if we even should!

EDIT: We have a joint income of 52.7K and we are 36 & 39 with no debt other than the mortgage

The biggest factor here might be that you are talking about only borrowing an additional £10k, but you are going to nearly double the term, that would indicate something is going wrong financially.
Between the two of you you are taking home £3,656 pcm (less any pension contributions).
£135k over 18 years at 4.5% would mean repayments of £913 pcm
£145k over 18 years at 4.5% would mean repayments of £981 pcm
£145k over 30 years at 4.5% would mean repayments of £731 pcm, however you would pay an additional £52,612 in interest over the term. 
Lenders are slightly sceptical of additional borrowing at the moment, that, combined with you wanting to increase the term significantly might be a warning sign to them in itself, they may lend you the additional and extend the term, but in my opinion it would be far from advisable for you to do both, borrow the extra £10k if you can, but do not extend the term.

Thank you for this. For some reason I had it in my head that in order to borrow more we would have to extend the term in order for the monthly repayment to be 'manageable', however £981 doesn't seem so bad. Ok we'd be saving less but I'm sure that's the same across the board. I'm glad I asked the question.

MattMattMattUK

IvyFlood said:

MattMattMattUK said:

IvyFlood said:

How likely is it we'll be able to borrow more when we come to remortgage in the current climate?

Current 5yf ends in September and we'll owe about 135K with 18 years remaining. We have a LTV of 56%. We'd like to borrow 10k more to do some renovations which we'll have to extend the term, possibly to 30 years. I'm hoping we'll be able to reduce the term in the future depending on what happens.

Our monthly repayment is £823 which to be honest we'd probably have to up the term anyway to keep it at that even if we didn't have the intention to borrow more. Otherwise we'd have no savings. I'm just not sure what our chances are of borrowing more or if we even should!

EDIT: We have a joint income of 52.7K and we are 36 & 39 with no debt other than the mortgage

The biggest factor here might be that you are talking about only borrowing an additional £10k, but you are going to nearly double the term, that would indicate something is going wrong financially.
Between the two of you you are taking home £3,656 pcm (less any pension contributions).
£135k over 18 years at 4.5% would mean repayments of £913 pcm
£145k over 18 years at 4.5% would mean repayments of £981 pcm
£145k over 30 years at 4.5% would mean repayments of £731 pcm, however you would pay an additional £52,612 in interest over the term. 
Lenders are slightly sceptical of additional borrowing at the moment, that, combined with you wanting to increase the term significantly might be a warning sign to them in itself, they may lend you the additional and extend the term, but in my opinion it would be far from advisable for you to do both, borrow the extra £10k if you can, but do not extend the term.

Thank you for this. For some reason I had it in my head that in order to borrow more we would have to extend the term in order for the monthly repayment to be 'manageable', however £981 doesn't seem so bad. Ok we'd be saving less but I'm sure that's the same across the board. I'm glad I asked the question.

It is always worth running the numbers on the big financial decisions, especially longer term things like mortgages where interest becomes an significant factor. The other one is overpaying, even small overpayments can have a significant impact, accumulating equity much faster, paying the mortgage off quicker, because the overpayment is entirely repaying the capital, rather than going towards interest. 
https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/