Positive equity

NI_Mitts

All,

Please excuse my ignorance as this is my first post....
I'm sure that along with many others, we currently seem to be living day to day just to pay bills.

My query is in regards to positive equity.

My wife and I are in our late 30's and earn a combined figure of approximately £2,200 per month. We have loans and a mortgage that takes approx. £1,700 per month. The value of our house is £160,000, and we have a repayment mortgage that finishes in 9 years for £50,000.

Our current property is not the 'house we want to die in' as my wife would say. An ideal property is available in our area for approx. £220,000.

We would like to sell this property and clear all debt and use the £90,000 balance for a deposit on the purchase of a £220,000 house. Giving us a monthly bill of approx. £950, thus a saving of £850 in outlays.

The problem is our credit rating is very poor, and I am hesitant to approach any lenders with this proposal. Would you recommend this course of action or can you advise of a different method to release this equity and reduce our monthly outgoings.

Rgds, and thanks

CLAPTON

are you saying you have 40,000 in unsecured debts?
If so you need to think about how you have acquired such a high level of debt and if spending habits that caused it have been addressed.
The major issue with 'consolidating' unsecured debts into secured debts is that if the spending habits haven't been corrected then in a few years you have both high level of mortgage and all the unsecured debts have been run up again.

If however the spending is under control and you anyway wish to move then
a. why is you credit rating poor... do you have CCJs, defaults late payments or what...have you copies of your credit records?

b. why are you reluctant to ask your currrent mortgage provider? they are after all, the most likely lender to make you an offer?
superficially, the new equity ratio is over 50% and the lending to income ratio is do able.

NI_Mitts

Clapton,

Thanks for the response.
Perhaps I have been too approx. with my maths.
The unsecured debt is a £12,000 loan (3 years remaining of a 5 year term) and two credit cards (1) £3,000 & (2) £1,000

I was thinking that if I sold house for £160,000, paid back the £15,000 and repaid original mortgage (50,000). I would have a balance of £90,000.

The poor rating stems back to more frivilious days and we had a few CCJ's in the late 90's. Our current issue is related to missed and late payments.

Rgds,

bryanb

Does a £50,000 mortgage really cost £1700 per month?