Mortgages - remortgaging or secured loan?

Question

Further to my earlier question on remortgaging and getting out of debt

Current Mortgage - £62000
House Value - £150000
Personal Debt - £61000 (never missed any payments on any of these debts)
My Salary £27000

I would like to roll and consolodate my debts, with the above figures - whats the best option I have? Will any mortgage company even consider me with my huge monthly repayments to me current debts even though I wish to consolidate them all into a mortgage.

Help Im getting very worried.

Answer 1

Gmac residential funding...

I'm with them...

I seem to have a very reasonable relationship with them...

Your situ is similar to mine...

If not Barcleys you can't go wrong with them... even get financial advice!

Oh them weekend sortie's to the local 7/11 stops today... 1 bottle of red... no more if you really have too!

I wish you good luck!

Answer 2

Cheltenham and Gloucester, and Alliance and Leicester are two companies that would help you on the basis of the information you have given.

Both companies allow you to borrow money for debt consolidation. You could cut out the fees of the middle man (the broker) by approaching either of these companies direct.

Your loan to value of property looks ok, however your income multiples are high. But still achievable.

I would approach C and G and ask whether they can help. It doesn't cost anything to ask. They have advisors in branches of Lloydstsb as well. Best bet is to make an appointment and sit down for a chat with an advisor, they will let you know there and then whether they can lend you the money or not.

Answer 3

depending on your credit score. average LTV (loan to value) is 80-90%. Some will give out 100% some will go higher to 103% -125% of your home value. higher the credit score the more lenders are willing to pawn out. Your salary is not a big issue, since your house value is high enough to cover your debts, you should be okay. and the term is refinancing, not remortgaging. do not go to your bank or a mortgage lender. go to a broker. you'll various different options as far as ARM, fixed rate, IO (interest only) as well as some different rates, again, depending on your credit. if you've never missed any payments ESPECIALLY your mortgage then you should be fine.

Answer 4

a mortgage is a secured loan (secured by the house) so the question itself doesn't make sense.

But I can give you some adivce anyway.
Go to the bank and ask for a Home Equity Line of Credit
Depending on the bank they will give you between 75% to 90% of the house value. The benefits are :
- you are only paying simple interest and not revolving interest(interest on interest)
- you can pay interest only, which reduce your monthly payment
- the rate is usually at prime (even prime + something it is still beter than revolving interest)

So apply for that and pay off your mortgage and your depts with the money (or part of your dept depening on the amount you qualify for).
Your new monthly payment (prev. mortgage and depts) should be a lot lower (around 560/mth). With the extra money pay off the part of dept you didn't pay off (if any) and invest the rest in a long term plan (retirment fund).

Answer 5

The amount of existing credit you have has no effect on your ability to remortgage your property if the purpose of the new loan is to consolidate your debts.

Your current mortgage (£62,000) and your debts (£61,000) only come to 82% of your properties value (£123,000 divided by £150,000 times 100). This is known as Loan to Value (LTV)

If you are unable to prove your income (eg. you are self employed, a contract worker, have commission based earnings or have more than one income) you may be able to apply for a 'Self Cert' mortgage which usually requires an LTV of 85% or less. While most self cert mortgages are usually designed for the self employed, they are not exclusive to them. Self certification is the process by which the amount that a customer borrows is based on what they claim is their income as stated in a signed declaration in the application form, but where they don't have to prove it on the basis of their accounts.

To combine your current mortgage & debts you would need a new mortgage for £123,000

To take an average self cert rate of 5.2% (depending on credit history) over 25 years your capital & interest repayments would be around £735 per month (or £535 interest only) - this is for guidance only and not a quote under the Consumer Credit Act.

If you are able to prove your £27,000 salary with payslips, P60, bank statements etc, you can apply for a standard mortgage which usually attract lower rates. However total mortgage lending amounts are calculated using multiples of your annual salary. This varies from lender to lender but is usually between 3 times and 5 times your income. So in your case this would give total lending amounts of between £81,000 and £135,000. The FSA (Financial Services Authority) which regulates most mortgage business in the UK recommend that borrowers should not exceed 3.5 times their income.

You should also remember that increasing the length of time you take to repay your debt will probably increase the total amount of interest you pay and your home may be repossessed if you do not keep up repayments on your mortgage.

If you'd like to chat to one of our advisors to discuss your requirements or to get a few quotes please drop us a line at [e-mail] with your phone number & the best time to call - the advice is free and if you decide to apply for a mortgage with us there are no broker fees to pay.