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How to borrow 70k?

(11 Posts)
NewNameForMoneyHelp Fri 14-Aug-15 19:52:31

Hi, have name changed as situation quite identifying if you know me so don't want to be outed. I'm pretty dense when it comes to money and don't have anyone who is good with this kind of thing to ask so thought I'd ask here.

We need to borrow 70k for building work that will add 100k + to value of our house (multiple neighbours in exact same house and have had exact same thing done and this has been the case, also in nice area of South East where house prices continue to rise steadily without fail)

I currently have a mortgage of £187500, house worth £250k so 62.5k worth of equity.

DP is not on mortgage as I purchased house before relationship was serious.

We now have DS 6 months and DD 9 (from previous relationship)

I renewed mortgage last year before I found out I was pregnant with DS, have 3.5 years left on a fixed rate (2.79%)

I earnt 45k pre mat leave, am currently still on Mat leave and earning this, will go back to work in January part time and earn 30k.

DP earns 35k salary with 15k bonuses.

I have no other debt at all, empty CCard with only 1.5k limit but don't use it. DP has a car lease which is quite expensive but he needs it for work as drives hundreds of miles weekly, he has no other debt apart from this.

My credit rating excellent, his Good.

So with all this info, what's the best way to borrow the 70k, we need it done by next year as space and bedroom situation are becoming unbearable, so can't save up. We want to pay lumps off early with DPs bonus to reduce interest payments so would like this to be an option.

I have been looking at homeowner loans but I don't have 70k worth of equity, does that matter? Would a smaller equity loan and DP take a personal loan be better? We are getting married in May so will be legally sorted in that sense. Shall I go to my bank and see what they could do for us? (I have been with them for 12+ years) or shall I see a independent financial advisor?

I just want a rough idea as don't want to go in completely clueless!

TIA if you have any advice smile

Didiusfalco Fri 14-Aug-15 20:12:44

Well your mortgage company wont want to lend you that amount these days - you cant release equity you dont have and it would be a bad risk. Borrowing that sum of money on a standard bank loan would be crazy even if it were possible. If i were you and needed room but couldnt afford to extend i would sell to get the equity out of the house and try to get a bigger mortgage on a more expensive property between you.

NewNameForMoneyHelp Fri 14-Aug-15 20:35:33

Thanks for your reply, I want to move but DP doesn't as location is perfect and he is right, it is perfect! It's all giving me a headache.

PotteringAlong Fri 14-Aug-15 20:37:43

Is there a cheaper option to achieve a similar result, eg going into the loft?

velidhu Fri 14-Aug-15 21:06:42

Well, your current household income is £35K and you basically want to extend your mortgage another £70K to approx £260K.

Imho, your best bet in order to succeed in applying for a further advance mortgage is to go back to work PT/FT immediately.

NewNameForMoneyHelp Fri 14-Aug-15 21:11:52

velidhu

I get full pay on maternity leave so current household income is 95k.

When I go back in January I will go part time and earn 30k so household income will be £80k.

Sorry if that wasn't clear.

Pottering yes we could get 2 thirds of the work done for 50k. Which is the way forward I think! Now to just convince DP!

addictedtosugar Fri 14-Aug-15 21:27:50

Do 2/3 of work, then house worth more. Gives you better equity, and might be able to borrow more. However very, I still think extending the mortgage by 50k would also be hard on the current equity you have.

TalkinPeace Fri 14-Aug-15 21:58:24

TBH when I put a 130k extension in this house I did it in stages of £20k of borrowing

NewNameForMoneyHelp Fri 14-Aug-15 22:29:35

I think that is what we will have to do, separate it into 3 stages.
The biggest bit is 32.5k
Then 17k
Then 20k.
So we could spread that over a 5/6 years.
How long did it take you TalkInPeace
I'm just finding it so stressful as I've never had debt and liked having a bit of equity but circumstances have changed so dramatically I feel a bit stuck!

TalkinPeace Fri 14-Aug-15 22:32:27

mine was several years ago and lending rules have changed
but we are both self employed

BUT
wiping out equity for 15 years of the right house is deffo the right ways to go

titchy Sat 15-Aug-15 11:16:05

I'd put the 32 on the mortgage (be careful - we did a loft conversion and our lender refused to release the money till the whole thing had been done to first fix - they regarded the house as having no value whilst the roof was off....), then use your dp's bonus for stages 2 and 3, then you'll still have a bit of equity.

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