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Can someone explain homeowner loans to me?

(2 Posts)
dodi1978 Thu 31-Mar-16 13:38:31

I just went through a decision in principle (so no full credit check!) with my existing mortgage provider. We are considering some work on the house that would require a loan, and it seemed to me that extending the mortgage was a good way of doing this.

Was told that we would have to apply for a homeowner loan instead as our fixed term mortgage only comes to an end next year. So, ok, went through all the financials.

We currently owe about 210000 on our mortgage. House should be worth about 320000. We have fairly big outgoings (childcare costs), but no other debt beside the mortgage, and manage fairly well day to day although it is rare for there to be much left at the end of the month.

I was told that I could borrow 129000 NOT taking my existing mortgage into account. So essentially, I can not borrow anything (not even the ca. 10000 I would need) before I pay off a substantial part of the mortgage. I don't understand this, as paying off an extra 100-200 pounds a month would be totally affordable.

The other option available is a personal loan, but I am obviously now worried about credit scoring. I really don't want to be rejected!

titchy Thu 31-Mar-16 14:10:20

What do you want to know? You applied and were rejected. Probably because their lending criteria is much tighter than it was when you originally took out the mortgage. You could go elsewhere for a secured loan but it will be expensive, probably similar to an unsecured loan, and again no guarantees. Save up? Remortgage when your fixed rate is up?

It not a case of you saying a couple of hundred is month is affordable - they have to think it is, which they clearly don't.

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