Secured loan and mortgage renewal

headoutthesand

I hope someone can help....

Before applying for a mortgage I was wondering if our secured loan is taken into consideration when obtaining a mortgage or if it is just the payments which are considered when looking at our outgoings?

We have a secured loan with Picture finance with £19,000 outstanding.

Out 4.3% FR mortgagewith Halifax is due to end in 3 months so we are looking for a mortagage for £65,000.

The house would sell for £110,000 but when we last spoke to the Halifax they said it was valued at £88,000.

It is an ex-council house which are going like hot cakes in our area. Really central scotland with excellent rail and road connections to both Glasgow and Edinburgh.

headoutthesand

Anyone......please......

I had a very brief discussion with the Halifax today and the girl said that I would need to tell the lender about the loan cos they would need to know about it but she wouldn't give me a straight answer to my question

~Beanie~

I'm a bit confused - are you just trying to get a new deal when your current fixed rate expires or are you actually wanting to move house?

LillyJ

headoutthesand wrote: »

The house would sell for £110,000 but when we last spoke to the Halifax they said it was valued at £88,000.
.

Er the house wouldn't sell at £110k if it's valued at £88k. I'm not trying to be mean, I am just pointing out the fact that it is valued for a reason. If a purchaser needs a mortgage, it will be based on a valuation and for that reason it would be very difficult (and a bit stupid) to buy a house valued at 88k for 110k.

Dan:_4

headoutthesand wrote: »

I hope someone can help....

Before applying for a mortgage I was wondering if our secured loan is taken into consideration when obtaining a mortgage or if it is just the payments which are considered when looking at our outgoings?

We have a secured loan with Picture finance with £19,000 outstanding.

Out 4.3% FR mortgagewith Halifax is due to end in 3 months so we are looking for a mortagage for £65,000.

The house would sell for £110,000 but when we last spoke to the Halifax they said it was valued at £88,000.

It is an ex-council house which are going like hot cakes in our area. Really central scotland with excellent rail and road connections to both Glasgow and Edinburgh.

Im not quite sure what your trying to achieve here. Do you owe 65K on your mortgage + 19K secured loan = 84K.

Have Halifax actually valued your house at 88K, or just told you thats what it is worth? Are the same houses selling for 110K in your street?

If you wish to keep your secured loan with Picture Finance, you will need to complete something called 'Deed of Postponment' which basically gives the mortgage company priority of funds when it is sold.

Or are you planning to remortgage and settle the picture loan?

headoutthesand

Thanks for the replies. I'm sorry I haven't made things clear - i'll try to clarify....

Im not quite sure what your trying to achieve here. Do you owe 65K on your mortgage + 19K secured loan = 84K.

Yes

[QUOTE]Have Halifax actually valued your house at 88K, or just told you thats what it is worth? Are the same houses selling for 110K in your street?
[/QUOTE]

From what I have been told and from past experience with them, they don't get anyone to value the house in person, it's all done from statistics on the area etc

[QUOTE]Or are you planning to remortgage and settle the picture loan?[/QUOTE]

I'd like to keep my options open but I thinkI will keep the loan seperate for the time being

Er the house wouldn't sell at £110k if it's valued at £88k. I'm not trying to be mean, I am just pointing out the fact that it is valued for a reason. If a purchaser needs a mortgage, it will be based on a valuation and for that reason it would be very difficult (and a bit stupid) to buy a house valued at 88k for 110k.

When I took the mortgage out with Halifax they explained that the valuation is taken from an average of the area not from the actual individual property.
The house 2 doors down sold 2 years ago for £93,000 when it was on the market for offers over £80,000. The house across the road sold for £105,000 2 weeks ago when it was on for offers over £92,000. Both these houses are identical to ours but we have more ground. What they lack - we have. We have a driveway with room for 3 cars and a massive back garden which has a decking area, double paved area for drying and enought room at the bottom for a trampoline and garden shed.

I'm a bit confused - are you just trying to get a new deal when your current fixed rate expires or are you actually wanting to move house?

Sorry - My FR ends so I am simply looking to renew. I couldn't afford to move anywhere until my debts are dealt with

NikkiP_2

Of course the secured loan will be taken into account. Your mortgage is a loan against your property, so is the secured loan. Both lenders will already know about the other loan as they will have had to agree to it.

You could always pay for a Valuation and ask them to use that although you need to remember that a Valuation and what someone will pay are not the same thing.

silvercar

They will take your loan repayments into account when they assess affordability ie how able you are to meet your financial commitments.

They will require a deed of postponement from Picture to place the mortgage as the first charge on the property ie if a repossession occured the mortgage would be cleared before the loan. Picture shouldn't have a problem with this as they are currently second in running to the mortgage so it won't alter the situation unless you were applying for more money.

Although the new lender will take the loan into account as they check you can afford your commitments, they won't be so bothered about the total loan being within say 80% of the property value, as the mortgage takes priority over the loan.

headoutthesand

Thanks NikkiP.

Is it safe to say then that we're screwed if the house is valued at £88,000 and i'm looking for a £65000 mortgage whilst having a £19000 secured loan.

That would be £84000 borrowed against a house worth £88000 which, and I am not very good at math, approx 96%

Sorry - Cross post with Silvercar

Silvercar - you have answered my question. Thank you very much.

I have spoken to picture and they explained all about the postponment thing so they have no problem.

Now I need to find someone who will take me on....

silvercar

If Picture are happy to remain in second place, I'm sure there will be lenders prepared to go in first place. After all the actual mortgage will be less than 75% of the value.

How easy it is to get a deal may depend on your credit rating.

headoutthesand

silvercar wrote: »

If Picture are happy to remain in second place, I'm sure there will be lenders prepared to go in first place. After all the actual mortgage will be less than 75% of the value.

How easy it is to get a deal may depend on your credit rating.

Yeh they are happy to stay in 2nd place. From what I understand it would cause lots of hassle for them to go first. The girl on the phone said I would need to phone them when I get all the details.

My credit rating is ok. It's not great and it has been worse. Infact I would even say that it was worse 2 years ago when we were accepted by HBOS than it is now.

I haven't missed a payment at all in the last year and I over pay everything often using all the extra money made from the DFW challenges, but appart from that we have enough cash to free up any rise in payments. We are over paying on our mortgage at the moment but only by £20. We were used to paying £410 a month with Natwest so we just continued doing so when the payments dropped to £390