Refinancing personal loans

[CJB82]

I have existing debt of c.€15k, and want to take advantage of low interest rates and property prices and buy a first home. I want to borrow a total of approx €215k, €200k for the house & €15k to clear my personal loans leaving me with one affordable repayment. I have no significant savings but could get guarantees or potentially a lump sum from family if necessary. I earn €45k gross per annum. Does anybody know where/ how I might go about this?

 

[fizzelina]

hi, im afraid you are going to find it very tough to get a mortgage without having a deposit (8-10% of house value) so the lump sum would be necessary. Also a bank will only lend 90-92% of the property value and most likely not the additional 15k you want. Besides I wouldn't add that 15k to a mortgage and pay it off over 25 years or so and possibly end up repaying a lot more in interest. And as well as the house deposit you need to fund the fit out / furniture. You really need to consider how you will pay the deposit, solicitor fees, any furniture. Also mortgages are harder to get now and it may only be for 2.5 times salary so 215k on a 45k salary is a high multiple and very hard to get in my opinion.

 

[CJB82]

Hi fizzelina, the reason I want to roll the existing loan into a mortgage is because the monthly repayment on a c.€200k mortgage would be less than my current loan repayment and current rent combined, making a mortgage on a well priced house that has very strong capital appreciation within the fixed term of the mortgage extremely affordable for me- it makes a lot of sense as in an investment. Any ideas on how to go about financing such a case?

 

[tenchi-fan]

You will probably get a mortgage of €180,000-€184,000 if you save €16,000-€20,000 yourself. You will not get a 100% mortgage nevermind the 107.5% mortgage you are proposing.

Banks have no interest in giving you the extra €15,000 at a low rate of interest when they can lend you the €15,000 separately at a rate of 10% apr over 10 years. During the boom you might have got the extra €15,000 if it was invested in adding value to your house.

What you may be thinking of is consolidation loans that were secured on your house. Some one might have had a house worth €300,000... a mortgage of €150,000, and credit card debt of €25,000, so banks would offer a loan of €175,000 paid over a long term at a low rate of interest. This is because the total LTV ratio would be 175k/300k = <60%. You were essentially "releasing equity" because the value of your house was much higher than your debt.

This will not be true in your case.