Releasing Equity

[Mairead]

Hi All,

My husband and myself have two properties, our primary residence and an investment property. We applied to our mortgage lender to release equity from our investment property. Current value of house is 400,000 and the mortgage left is 190,000. They refused us as they say that based on only one salary in our house that we could not afford the 30,000 that we were looking for. (I am a full time mum)
They also would not offer any amount at all to us.
We are obviously surprised and very disappointed as we wanted to use this money to pay off some loans and consolidate them all into one big loan. We also feel that if the property has the equity that we should be able to release it as I know that many others have, especially as it is not even our primary residence. My husbands gross salary is around 64,000 basic with around another 50,000 ote. We also have loans of around 24,000 (this includes a car loan of 16,000), the rest being a personal loan and credit card.
Has anyone any advice on this? We have contemplated selling the house and clearing these loans and just saving the profit from the house, but this really is our last resort.

 

[DrMoriarty]

Have you approached any other lenders, or a broker? On the face of it, it seems a little surprising, but there could be further relevant details that would affect a lender's assessment of the risk involved...

 

[ClubMan]

We are obviously surprised and very disappointed as we wanted to use this money to pay off some loans and consolidate them all into one big loan.

Don't forget that consolidating otherwise shorter term, unsecured, higher cost loans onto a mortgage and then paying the additional top-up over the full term of the mortgage is often (a) a once off solution to financial issues that have arisen and (b) not necessarily the most prudent way to manage your debts - you may pay less per month but a lot more in the long run in interest. You need to crunch the numbers to check.

We also feel that if the property has the equity that we should be able to release it as I know that many others have, especially as it is not even our primary residence.

Be that as it may if a lender doesn't believe that you have the capacity to service all of your debts then they are not only entitled to but probably also being prudent in turning you down for your sake as much as their own.