Ashz09 Posted May 3, 2017 Share Posted May 3, 2017 Hi All, For the 1st time I'm Re-Mortgaging soon. I'm thinking of taking some Equity out of the house. For argument sake say the house is worth around £90,000 (This includes the Solar Panels and the Doors I've purchased) and I've got a current Mortgage of around £72,000. How much would I be able to take out of the Home and do I have to pay Interest or would I have to pay a fee? Any help or input will be appreciated as I have no idea! Link to comment Share on other sites More sharing options...
TomBustler1884 Posted May 3, 2017 Share Posted May 3, 2017 I don't have the answers, but Oviso on Queen Street in Derby were fantastic for us when we remortgaged. Link to comment Share on other sites More sharing options...
Ashz09 Posted May 3, 2017 Author Share Posted May 3, 2017 They look to have good reviews that's for sure! I'm with Leeds Bank Society at the moment they are good so might try and stay with them to avoid fees of swapping Mortgages etc. I could be wrong though a Broker is the best bet. Stressing me all out lol. Link to comment Share on other sites More sharing options...
Wolfie Posted May 3, 2017 Share Posted May 3, 2017 So, you've got a 20% deposit for a new mortgage as it is, effectively. What the cost will be, will depend on how much you want to take out and what the deals are in the market. Remember that interest rates normally increase if you have a lower deposit, so if you take £9k equity and have a 10% deposit, you are likely to have to pay a higher rate of interest - on a higher mortgage value. Make sure you do your sums & can afford the new payments!. Any minimum deposits required & arrangement fees etc will depend on the lender & deals you're looking at. I've only ever released equity in order to pay for home improvements - which will in turn, add value to the house. I have friends who have taken equity out to pay for holidays & general spending sprees, which I think is a bit daft but maybe that's just me. Link to comment Share on other sites More sharing options...
King Kevin Posted May 3, 2017 Share Posted May 3, 2017 9 minutes ago, Ashz09 said: They look to have good reviews that's for sure! I'm with Leeds Bank Society at the moment they are good so might try and stay with them to avoid fees of swapping Mortgages etc. I could be wrong though a Broker is the best bet. Stressing me all out lol. Plenty of fee free remortgage deals around ,and there is no need to pay a broker fee find one that doesn't charge.All depends on your new loan to value ratio as to what deal you will get. Link to comment Share on other sites More sharing options...
G STAR RAM Posted May 3, 2017 Share Posted May 3, 2017 27 minutes ago, Ashz09 said: Hi All, For the 1st time I'm Re-Mortgaging soon. I'm thinking of taking some Equity out of the house. For argument sake say the house is worth around £90,000 (This includes the Solar Panels and the Doors I've purchased) and I've got a current Mortgage of around £72,000. How much would I be able to take out of the Home and do I have to pay Interest or would I have to pay a fee? Any help or input will be appreciated as I have no idea! When you say you are taking equity out of your house what do you mean exactly? Are you re-mortgaging just to get a lump sum of cash in your hand to spend as you please? Link to comment Share on other sites More sharing options...
Ashz09 Posted May 3, 2017 Author Share Posted May 3, 2017 14 minutes ago, Wolfie said: So, you've got a 20% deposit for a new mortgage as it is, effectively. What the cost will be, will depend on how much you want to take out and what the deals are in the market. Remember that interest rates normally increase if you have a lower deposit, so if you take £9k equity and have a 10% deposit, you are likely to have to pay a higher rate of interest - on a higher mortgage value. Make sure you do your sums & can afford the new payments!. Any minimum deposits required & arrangement fees etc will depend on the lender & deals you're looking at. I've only ever released equity in order to pay for home improvements - which will in turn, add value to the house. I have friends who have taken equity out to pay for holidays & general spending sprees, which I think is a bit daft but maybe that's just me. I'm aiming to take either £10,000 to pay off my Solar Panels and buy a new Bathroom or just the £5,000-6,000 to pay off the Solar Panels. I'm aiming to add Value to the House as much as possible. If it avoids the fees of switching to a different lender by sticking with the same Back then that'll swing me to stick with them. As I guess their Interest rates are actually very good thankfully. 2 minutes ago, G STAR RAM said: When you say you are taking equity out of your house what do you mean exactly? Are you re-mortgaging just to get a lump sum of cash in your hand to spend as you please? My Mortgage runs out in August. So I'm looking to re-mortgage and thinking of using my Equity to my advantage and trying to pay off my Solar Panels as I'll save £1,000 in interest. Link to comment Share on other sites More sharing options...
G STAR RAM Posted May 3, 2017 Share Posted May 3, 2017 5 minutes ago, Ashz09 said: My Mortgage runs out in August. So I'm looking to re-mortgage and thinking of using my Equity to my advantage and trying to pay off my Solar Panels as I'll save £1,000 in interest. I would do some 'fag packet' calculations if I was you. Just think that every £1 you borrow on your mortgage will cost you £2-50, minimum guess, to pay off. So it may save you interest short term but be a lot more expensive in the long run. Those solar panels you bought for say £10,000 to save you £x amount, could end up costing you £30,000 if stuck on your mortgage! Link to comment Share on other sites More sharing options...
Ashz09 Posted May 3, 2017 Author Share Posted May 3, 2017 Just now, G STAR RAM said: I would do some 'fag packet' calculations if I was you. Just think that every £1 you borrow on your mortgage will cost you £2-50, minimum guess, to pay off. So it may save you interest short term but be a lot more expensive in the long run. Those solar panels you bought for say £10,000 to save you £x amount, could end up costing you £30,000 if stuck on your mortgage! That's the bit I'm confused about. Is 'Equity' and 'Borrowing'. If the house was worth £90,000 and the Mortgage was £70,000 and I took £10,000 would I have to actually pay any interest etc? As in theory that's kind of my money to take. My Sister has just took £20,000 out of hers and according to her it's just put onto the Mortgage. So instead of her Mortgage being £70,000 it's now £90,000 and that's it. She is a 1st time buyer though . Link to comment Share on other sites More sharing options...
G STAR RAM Posted May 3, 2017 Share Posted May 3, 2017 3 minutes ago, Ashz09 said: That's the bit I'm confused about. Is 'Equity' and 'Borrowing'. If the house was worth £90,000 and the Mortgage was £70,000 and I took £10,000 would I have to actually pay any interest etc? As in theory that's kind of my money to take. My Sister has just took £20,000 out of hers and according to her it's just put onto the Mortgage. So instead of her Mortgage being £70,000 it's now £90,000 and that's it. She is a 1st time buyer though . Yes, to release the equity you would have to borrow more money against your house. Using your example, your house is worth £90k with a mortgage of £70k so you have £20k equity. To release £10k of that equity you would re-mortgage for £80k. Your house is still worth £90k, You now have a mortgage of £80k, so your equity is now £10k and the other £10k is in your bank. In effect you have just borrowed another £10k. Link to comment Share on other sites More sharing options...
Ashz09 Posted May 3, 2017 Author Share Posted May 3, 2017 1 minute ago, G STAR RAM said: Yes, to release the equity you would have to borrow more money against your house. Using your example, your house is worth £90k with a mortgage of £70k so you have £20k equity. To release £10k of that equity you would re-mortgage for £80k. Your house is still worth £90k, You now have a mortgage of £80k, so your equity is now £10k and the other £10k is in your bank. In effect you have just borrowed another £10k. Makes sense so on that borrowed amount of £10k you have to pay interest etc. Kind of makes no sense in taking money out as you'd end up paying around £20-30k in total maybe with interest etc. Link to comment Share on other sites More sharing options...
Stive Pesley Posted May 3, 2017 Share Posted May 3, 2017 Probably best to stop thinking about it as taking equity out of the house, and call it what it is - taking on more debt/extending your mortgage. All you are actually doing is convincing the bank to lend you more on the basis that your home is worth more than it was if they end up repossessing it! I did this a couple of years back when my main deal ended - I wanted to add £10k to the mortgage for home improvements. It actually ended up better to take out a small second mortgage rather than consolidate it all into one, but that was because the main morgage reverted to base rate and that was cheaper than any of the existing "deals" they could offer Link to comment Share on other sites More sharing options...
G STAR RAM Posted May 3, 2017 Share Posted May 3, 2017 9 minutes ago, Ashz09 said: Makes sense so on that borrowed amount of £10k you have to pay interest etc. Kind of makes no sense in taking money out as you'd end up paying around £20-30k in total maybe with interest etc. That's correct and by increasing your mortgage you would also be increasing the loan to value ratio and therefore most likely be paying at a higher rate of interest (that obviously depends on what deals are available though). Before taking out any debt I always think it's a good idea to work out what option will cost you most to repay. A mortgage at 1.99% interest may sound very attractive but when taking 25 years to repay the interest soon adds up! I also think it's a good idea to match debt repayment with the life span of the asset your are purchasing ie I would not recommend sticking £10,000 on a 30 year mortgage to buy a car that you only want to keep for 5 years Link to comment Share on other sites More sharing options...
Ashz09 Posted May 3, 2017 Author Share Posted May 3, 2017 3 minutes ago, G STAR RAM said: That's correct and by increasing your mortgage you would also be increasing the loan to value ratio and therefore most likely be paying at a higher rate of interest (that obviously depends on what deals are available though). Before taking out any debt I always think it's a good idea to work out what option will cost you most to repay. A mortgage at 1.99% interest may sound very attractive but when taking 25 years to repay the interest soon adds up! I also think it's a good idea to match debt repayment with the life span of the asset your are purchasing ie I would not recommend sticking £10,000 on a 30 year mortgage to buy a car that you only want to keep for 5 years Good point thanks for your help, I think I'll not get any equity out of the house and transfer the Solar Panels to a 0% interest free Credit card and use topcashback for some money back also. As much as I'd like a new Bathroom etc I'm thinking it's better to save! Link to comment Share on other sites More sharing options...
G STAR RAM Posted May 3, 2017 Share Posted May 3, 2017 1 minute ago, Ashz09 said: Good point thanks for your help, I think I'll not get any equity out of the house and transfer the Solar Panels to a 0% interest free Credit card and use topcashback for some money back also. As much as I'd like a new Bathroom etc I'm thinking it's better to save! A bathroom is a slightly different animal. That hopefully should add value to your home so would not be completely 'releasing equity'. Using your example again. Your house is worth £90k with a £70k mortgage so you have £20k equity. You borrow £10k for a new bathroom which adds £5k value to your house. Your house is now worth £95k and your mortgage is £80k. So although you have borrowed £10k you have only reduced your equity by £5k. Obviously my figures are plucked from the sky but sure someone would be able to advise what value home improvements would add to your house. Link to comment Share on other sites More sharing options...
McRamFan Posted May 3, 2017 Share Posted May 3, 2017 Also bear in mind that there is a limit to how much value you can add to your home. Link to comment Share on other sites More sharing options...
Stive Pesley Posted May 3, 2017 Share Posted May 3, 2017 6 minutes ago, McRamFan said: Also bear in mind that there is a limit to how much value you can add to your home. You mean you regret the massive champagne fountain you installed in the garden?? Link to comment Share on other sites More sharing options...
McRamFan Posted May 3, 2017 Share Posted May 3, 2017 10 minutes ago, StivePesley said: You mean you regret the massive champagne fountain you installed in the garden?? Daily... Link to comment Share on other sites More sharing options...
Wolfie Posted May 3, 2017 Share Posted May 3, 2017 1 hour ago, King Kevin said: Plenty of fee free remortgage deals around ,and there is no need to pay a broker fee find one that doesn't charge.All depends on your new loan to value ratio as to what deal you will get. Some brokers get special deals with the lenders. Make sure they're independent, though I've used one a couple of times & she was really good. Her fees were about £350 from memory but she got me a better deal with NatWest, than they were publicly offering at the time. She also managed to get me a higher valuation on my house - which meant that my loan to value ratio went down and I ended up in a cheaper band for the interest rate. Over the life of that particular deal, she saved me about 3 times as much as she cost me in fees. Link to comment Share on other sites More sharing options...
ketteringram Posted May 3, 2017 Share Posted May 3, 2017 ...... and Another thing to bear in mind! You're not borrowing it from the bank or building society. You're borrowing it from your future self. Link to comment Share on other sites More sharing options...
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