Can I top up mortgage?

[Liamos]

I don't know if this is the correct forum. Looking for advice on this situation. We are €1000 in arrears on our mortgage. This has been reduced from €4 - €5K in arrears a year ago. We should have it clear in another two months. I have a personal loan of €4,500 on which I had missed repayments, but is now up to date.

Our financial situation should improve by about €1000 per month in August when we hire an au pair and stop paying creche fees. We want to borrow between €20 - €30K to carry out renovations. What are my chances?

I know my credit rating will not be good due to the missed repayments.
Should I go to my building society and try to get a top up loan? Our mortgage is €360K and I'd say our house is worth €470K.

Thanks.

 

[VOR]

Hi Liamos. I would consider that a stretch. Are the renovations that necessary? Perhaps the building society will see it differently in a few months but I don't think it has any hope at the moment.

I don't work in a bank but I did once and am just applying my experience to what you have said. A top up of €30K will add about €150 a month to your mortgage. Let's be blunt about it, you are have not been meeting the existing repayments on a monthly basis. If you were €5K behind on payments you were 3 months in arrears. That is a long time and as you are still in arrears it would be unwise to lend you any more.

IMHO, you really need to get the arrears up to date and keep meeting the monthly payments for 12-18 months to have any hope. The personal loan will also be a worry to the bank and will show on the bureau. If your situation does improve from August onwards, you really should apply that to clearing your loan and paying your mortgage.

I don't know what level of loan to values banks are looking at now but €30K more would push your LTV to 83% and that's if you could get a valuation of €470K.

Also I would not think of going down the route of a sub-prime mortgage. It will cost you too much in the long run.

This is just my personal opinion. I hope you have more success that I am outlining. Best of luck.

 

[Liamos]

Thanks for that enlightening reply. I was afraid that that might be the case. I suppose the only thing for it is to go into my building society and ask them what they need me to do, and how long it will be before my credit rating is improved.