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Remortgage questions

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  • 07-09-2014 8:55pm
    #1
    OUTOFSYNC
    Registered Users Posts: 136 ✭✭


    Hi

    I am thinking of going to my mortgage provider to remortgage. I have no idea of what this entails yet but any advice would be welcome.

    - I am coming to the end of my first year of fixed mortgage (borrowed 90K)
    - I was approved for approx 250k
    - I got a credit union loan of 14 k for renovations
    - I accumulated 6k credit card debt over last year (extra renovations and
    other things)
    - House is probably worth between 170k and 220k (going on asking prices on myhome/daft)
    - I havent saved any money in last year (with renovations I've over spent)
    - I have no money
    - My car just broke beyond repair

    I was going to ask the bank for 20k to add onto mortgage - pay off cc debt and replace car and maybe pay down some credit union loan.

    Does this sound like a request the bank would consider?


Comments

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    #2
    spaceHopper
    Registered Users Posts: 3,991 ✭✭✭spaceHopper


    You would be getting a top up and not a new mortgage. Still there could be legal fees. You need to do out a budget to see what you can afford to borrow. You might be better off getting another cu loan clearing the cc and buying a cheap car. Mortgage rates appear low but they are long term so you'll be paying for the new car long after it has died too.


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    #3
    ABC101
    Closed Accounts Posts: 1,118 ✭✭✭ABC101


    OUTOFSYNC wrote: »
    Hi

    I am thinking of going to my mortgage provider to remortgage. I have no idea of what this entails yet but any advice would be welcome.

    - I am coming to the end of my first year of fixed mortgage (borrowed 90K)
    - I was approved for approx 250k
    - I got a credit union loan of 14 k for renovations
    - I accumulated 6k credit card debt over last year (extra renovations and
    other things)
    - House is probably worth between 170k and 220k (going on asking prices on myhome/daft)
    - I havent saved any money in last year (with renovations I've over spent)
    - I have no money
    - My car just broke beyond repair

    I was going to ask the bank for 20k to add onto mortgage - pay off cc debt and replace car and maybe pay down some credit union loan.

    Does this sound like a request the bank would consider?

    Are you sure the car is beyond repair? Before I would splash out on another car, I would get a second opinion. You may have already done that.

    Sounds like a lot of loans going out... you could try approaching the bank... see what happens. They probably will say no.. but there is a chance they could say yes.

    CC loans are one of the most expensive ways of borrowing money... best paying that off ASAP if you can. Not sure what CU loans are like,... but I believe they are more expensive than mortgages.

    If I was in that situation.... I would try making an approach to the bank.... explaining to them that while the initial mortgage was small (90K)... the cost of renovations exceeded your initial budget and would there be a opportunity to increase the initial amount i.e. up by the 20K you mention.

    The fact that you have demonstrated an ability to pay for the 1st year of the mortgage should stand in your favor. In fact the 90K should now be down to 87K or something like that.

    In addition you could offer to increase your monthly repayment to above the monthly calculated amount, i.e. 90K mortgage repayment is 500 euro / month.

    110K mortgage repayment is 600 euro / month.

    If the deal is done... you offer to repay 660 euro / month so that the 110K is repaid in the original timeline as the 90 k mortgage.

    On the other hand.. banks make a lot of money from CC rates. They do not normally like substituting a profitable loan to a less profitable one.

    Put a good presentation together.... and you may win them over...


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    #4
    OUTOFSYNC
    Registered Users Posts: 136 ✭✭OUTOFSYNC


    The credit card debt is with another bank altogether - until bought the house always paid off in full but have been paying the minimum since beginning of year.

    The mortgage is quite cheap and can well afford it normally but I did underestimate the reno costs. Thats said the house was awful when I bought it and now has new everything - so was done up quite cheaply, so hopefully bank will see that as a good thing - rather than me being irresponsible with money. They would not fund the renovation costs last year when I was applying for mortgage.

    Ive put 1k into car this year, and it has still broken down 4 times in last 5 months (never broke down before). It is 14 years old. I feel spending anymore money on it would be unwise.

    I am maxed out on credit union loans (have 4k saved and owe approx 13k). Are there any other options?


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    #5
    tinofapples
    Registered Users Posts: 2,959 ✭✭✭tinofapples


    spaceHopper wrote:
    Mortgage rates appear low but they are long term so you'll be paying for the new car long after it has died too.

    8/9 years ago when we were in planning stages my supervisor at the time (An older woman) advised that I borrow enough to buy myself a nice car as a mortgage was the cheapest loan out there, sums up really what was wrong at the time 😜

    Op, do your sums up and show the mortgage provider, in fairness you're trying to be proactive. Good luck 😊


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    #6
    ABC101
    Closed Accounts Posts: 1,118 ✭✭✭ABC101


    Yeah sounds like you need to change the car, no point in putting more money into an older car.

    If you could get a relatively modern reliable second hand car, more economical, less road tax then the annual cost of ownership could be less than what you are paying now. This would give you more cash in your pocket per year.

    In my own case, I changed my car this year, now it did cost me 7k with a trade in, but my annual savings are around 800 euro / year on running costs due to lower road tax and more efficient mpg.

    The trick is to get a good make, which has high reliability, I would recommend Honda or Subaru makes.

    The fact that you have 4k in savings is a major plus point in your presentation, you could just swing it with the bank.

    Well done on getting the house sorted, at least that is out of the way now, another plus point in your case.


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    #7
    OUTOFSYNC
    Registered Users Posts: 136 ✭✭OUTOFSYNC


    My concern is that the bank might not allow me to remortgage to pay off external debt. It makes economic sense for me and they would make money from my debt. However colleagues have tried this and were refused. What I'm hoping is that the increased equity in my house will be viewed positively.


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    #8
    ABC101
    Closed Accounts Posts: 1,118 ✭✭✭ABC101


    OUTOFSYNC wrote: »
    My concern is that the bank might not allow me to remortgage to pay off external debt. It makes economic sense for me and they would make money from my debt. However colleagues have tried this and were refused. What I'm hoping is that the increased equity in my house will be viewed positively.

    Yeah, now that the house has been renovated, it's value will have increased, and the market has risen over the last 12 months.

    Might be worthwhile getting two or three valuations from estate agents which show the house is now worth a lot more , ie 50 or 60k more or something like that.

    Unfortunately that could cost 200 euro per evaluation.

    But still I think it is doable.... As you took out a small mortgage initially and where not maxed out to the absolute limit of what you could borrow initially.

    Get your case together and give it a shot.


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    #9
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    I think your lender will consider a top up of 20k if you can provide receipts etc. for the works carried out. You will also need a new valuation. You need to advise them that you used Credit Union loan and Credit Card to pay for the home improvements. They will put a condition on the loan offer that you clear both the Credit Union Loan and the Credit Card from the proceeds. I don't think they will consider providing you extra funds for the car.


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