Borrowing request hits brick wall?

by Readers Question

15:11 PM, 26th September 2017
About A year ago

Borrowing request hits brick wall?

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Borrowing request hits brick wall?

After some advice, as have been a bit naive and hit a brick wall. I am looking to borrow more money against a property which has some equity in it, but is not due for remortgage yet.

My thinking is that I’d like to have some money available should an opportunity come up to invest and if I can’t find anything that I have additional money in case I need it as a liquidity buffer. I would invest the money in peer-to-peer to help cover the interest.

However, having applied I have been asked for the mortgage offer on a property I haven’t found yet. I’d appreciate people’s thoughts on whether I should reapply for a different use and if so what’s acceptable i.e could I say I would put the money in peer-to-peer? Or that I would spend it on property repairs?

I don’t see the point in continuing on the basis of a property investment until I find a place to buy as I’d incur survey fees etc.

However, I’d really like to hold the money rather than the bank having my equity particularly as interest rates look like they will rise.

Many thanks

Richard

 



Comments

Neil Patterson

15:18 PM, 26th September 2017
About A year ago

Hi Richard,

When you say the loan is not up for remortgage yet I am assuming you are applying for a Further Advance with your existing lender?

Peer-to-Peer lending is likely to be seen as high risk for a low margin mortgage lender.

If that is the case you are at the mercy of that lenders specific criteria on purpose for remortgage. Hence, probably why they wanted to see proof of the new purchase if that was the reason given.

If you fall outside their criteria I would definitely not give a false purpose for the money. There are lenders that will remortgage and raise equity for future purchases without the need to have an offer currently going through, but from what you have said you are likely to incur an early redemption penalty.

How long does your current deal have to run and is there an ERC (early repayment charge)?

Richard U

16:57 PM, 26th September 2017
About A year ago

Thanks for your response Neil. I certainly have no intention of deceiving the lender, the truth is that the money could be for a variety of purposes, but it seems this isn't acceptable and it has to be specific? My mortgage is due to run until 2020 and there is a decreasing ERC of 5%, 4%, 3% and as such makes it pretty unappealing to go down this route.

Colin Dartnell

13:08 PM, 27th September 2017
About A year ago

I would wait until you find the property you want before taking out any loans. You will be paying interest on the money while it is sitting in the bank earning next to nothing.
It does sound a bit like you want money in the bank to spend on whatever you choose, which if you do you spend it you may not be able to raise further capital for property when the time comes.

david porter

1:55 AM, 28th September 2017
About A year ago

I have not bought anything for two years.
I have not been able to find anything worthwhile.
I would hold my peace untill I found something.

Richard U

11:45 AM, 28th September 2017
About A year ago

Thanks, for the comments. I think i will follow your advice. Whilst I was hoping to hold the money now as I think the market may turn and it might not be available in the future. I think I have little choice - as ever the banks are in charge!


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