Equity release possibility? To pay a loan off?

[hanban89]

Ok our mortgage fixed term is coming up in February. When we moved almost two years ago I was not eligible to go on the mortgage as I had recently went self employed. As a result we put everything we had into the deposit. After we moved we ended up taking out a loan to be repaid over 4 years. The loan cost is £290 per month and my business is quiet and I'm finding it very hard to pay myself over the winter. My question is, is it possible to release some of the money we put into the house to pay the loan in full? I would be eligible for the mortgage now as I have 3 years accounts.

It sounds like you are looking for additional borrowing rather than equity release?

It depends entirely on your circumstances but, based on what you've said, I think you'll struggle.

If you're finding it hard to meet the loan repayments it's very unlikely a lender is going to be happy advancing you more because your affordability sounds really tight.

I know it seems counter intuitive because you'd free up what you're paying on the loan just now but lenders are generally cautious when refinancing existing debt as it implies you're not managing your finances as well as they'd like.

Still might be worth talking to a broker to see what they think based on the actual numbers though.

We put £30K down as a deposit, so I was hoping we could take about £10K back out to clear the loan, and put me on the mortgage. Our mortgage just now is solely in DH's name and was based only on his income. The 3 years accounts I have are quite consistent with showing my income (profit) £12K. So my thinking was we would be allowed more on the mortgage with adding me. This would reduce our monthly outgoings and would help a lot. I'll need to go and see a broker to see if this is possible I think. So yea I think it would be borrowing a bit more on the mortgage but paying off our other debt? It's manageable as it is, it's just that I would like to start saving. My business should start picking up February again as it's very seasonal so I'm not worried about my income hugely. Just need to use my business savings. Sorry if that's a bit confusing!

How much is the property worth and how much is the current mortgage?

We paid £150k for house and put down £30K. Our outstanding mortgage is £117K. I checked last night. The house has also went up in value and a neighbour has sold for £160 and theirs is a semi while ours is detached (same house internally).
I had a look into it online, so it looks like we would want to be borrowing more on our mortgage?

No one can answer this for you OP as it depends on your specific circumstances, you'll need to ask your lender or a broker.

Only they can decide if it's possible based on your actual detail because no 2 applications are exactly the same e.g., based Someone who wants the money for an extension on a property with 2 good salaries is a different prospect to someone who needs the money for debt consolidation because their cash flow situation is a bit precarious.

Are you sure you've only paid £3k off the mortgage in 2 years?

Yea checked the mortgage stayement and it definitely says £117. We went through a broker two years ago and this is the deal we got. I don't think there was much choice as DH was applying as a single applicant and could get 4xsalary. I think me being self employed might be the bigger issue. I will contact the broker and see what he thinks. Part of me now thinks suck it up and pay the loan off as we are which has 2 years left, and leave the money we have in the house alone. If we did want to move which we aren't planning at the minute it gives us more equity for future. Especially if there is an increase in prices. We are only in our 20s so part of me thinks we have plenty time for mortgage though, and getting rid of the loan now would give us a lot more disposable income and we would be able to go on holiday abroad. Aah I don't know.