Mortgage Offer & Borrowing
Discussion
Morning all,
Mrs Southerner and I decided a little while back to borrow a bit against the house, we applied for an additional mortgage of £40k to clear some finance/debts and tart up the house. Our application was approved and the offer is sitting indoors, however with the continuing doom & gloom - and the main mortgage due next year - we've come to the conclusion that protecting our equity is a bigger priority, and so we're not going to go ahead. The mortgage bod essentially told us that if we changed our mind just don't send back the paperwork, but th3 offer stands into next year. We're looking instead other options, most likely a much smaller loan instead (maybe £10k or so), but are finding that the same bank are blanking us for any other form of borrowing. This is Barclays, who up until recently are usually desperate to flog us a Barclaycard and send junkmail out trying to push it frequently.
So, the question - does having a 'live' mortgage offer impact our affordability status for other borrowing? Are the bank factoring in the anticipated additional mortgage payments when considering our affordability for anythibg else? Or indeed is there a 'block' on any major financial changes due to a pending mortgage commitment? I appreciate that things have likely tightened up enormously since the economy fell apart, but this seems a very sudden change in their stance. Our income hasn't changed, and whilst we're pushed in these tough times the same as everyone else, there's plenty coming in.
Any thoughts appreciated!
Mrs Southerner and I decided a little while back to borrow a bit against the house, we applied for an additional mortgage of £40k to clear some finance/debts and tart up the house. Our application was approved and the offer is sitting indoors, however with the continuing doom & gloom - and the main mortgage due next year - we've come to the conclusion that protecting our equity is a bigger priority, and so we're not going to go ahead. The mortgage bod essentially told us that if we changed our mind just don't send back the paperwork, but th3 offer stands into next year. We're looking instead other options, most likely a much smaller loan instead (maybe £10k or so), but are finding that the same bank are blanking us for any other form of borrowing. This is Barclays, who up until recently are usually desperate to flog us a Barclaycard and send junkmail out trying to push it frequently.
So, the question - does having a 'live' mortgage offer impact our affordability status for other borrowing? Are the bank factoring in the anticipated additional mortgage payments when considering our affordability for anythibg else? Or indeed is there a 'block' on any major financial changes due to a pending mortgage commitment? I appreciate that things have likely tightened up enormously since the economy fell apart, but this seems a very sudden change in their stance. Our income hasn't changed, and whilst we're pushed in these tough times the same as everyone else, there's plenty coming in.
Any thoughts appreciated!
simon_harris said:
I've always been of the opinion that borrowing against the mortgage to pay off "regular" debt was a bad idea and will cost you more in the long term. Borrowing against the mortgage for home improvements that will add value to the property can be a good thing.
Or switch to cheaper mortgage debt, keep the same level of debt repayments as before and pay it off much quicker due to the interest rate differential?Slaav said:
Or switch to cheaper mortgage debt, keep the same level of debt repayments as before and pay it off much quicker due to the interest rate differential?
Exactly. If your credit card is at 12% and your mortgage is 4% then moving the debt to the house and paying it off in the same amount of time will be much cheaper. Gassing Station | Finance | Top of Page | What's New | My Stuff