Increasing Mortgage borrowing experiences

HungryHippos · 25 Aug 2017 at 22:04

I have recently moved house, my equity is very good (46%) but I had to borrow some money from the bank of M & D as Natwest would not lend me as much as I wanted to borrow originally.

As far as the bank is concerned, it's a no-strings loan. But of course it's not in reality, and I do in fact need to pay it back, which is in progress but will take a while. I am settled in and have pretty much everything I need.

I have had a material pay increase recently (approx. 10% by combination of salary and bonuses), so I was hoping to go back to the bank and ask if they will extend the borrowing limit on my mortgage a little. I should be able to borrow 10-15K in theory and still maintain over 40% equity, which is around the value I am looking to add to my mortgage balance.

Has anyone been through this and can share experiences?

Natwest (http://personal.natwest.com/personal/mortgages/manage-your-mortgage/borrowing-more.html) claim I can use the money for:

Home improvements
New & used cars
A dream holiday
Wedding

Should I just lie and tell them it's for home improvements? will they want any evidence to support it, or will they not care as long as the affordability is there?

Will arranging it cost anything, I don't want to remortgage here really as it's a reasonably new fix deal anyway.

Martynt74 · 25 Aug 2017 at 23:00

From memory you can't change the terms of your existing deal but you may be able to take out a second mortgage for the extra balance.

I think it has to be with the existing lender though (i.e. You can't shop around)

muon · 25 Aug 2017 at 23:15

Best time to do this would be when you remortgage.

Can't hurt to ask though. I imagine what you want to do is pretty common.

HungryHippos · 26 Aug 2017 at 00:37

Yeah I'd agree about remortgage time but it's almost 2 years away and getting some extra balance on the mortgage before then would be amazing.

Just unsure if they will want some kind of proof of what I need the money for? Not that it should matter to them really.

doggles · 28 Aug 2017 at 00:26

HungryHippos said:
Yeah I'd agree about remortgage time but it's almost 2 years away and getting some extra balance on the mortgage before then would be amazing.

Just unsure if they will want some kind of proof of what I need the money for? Not that it should matter to them really.

I doubt they'd need proof of what you're going to use it for, just say a new car or whatever. I imagine even telling them it's to repay your parents it would be fine.

Skillmister · 28 Aug 2017 at 08:44

doggles said:
I imagine even telling them it's to repay your parents it would be fine.

No it wouldn't, seeing as his parents probably had to sign off that it was a non repayable gift and OP will have told his bank that too.

HungryHippos · 28 Aug 2017 at 10:46

Yes I think I would be wise not to tell them the true reason I want it, as long as I can say new car and they don't require proof that would work for me.

Psycho Sonny · 28 Aug 2017 at 12:52

HungryHippos said:
Yes I think I would be wise not to tell them the true reason I want it, as long as I can say new car and they don't require proof that would work for me.

so you want to commit fraud?

if you can afford to repay the loan. why not just repay your parent directly monthly?

HungryHippos · 28 Aug 2017 at 12:59

Psycho Sonny said:
so you want to commit fraud?

if you can afford to repay the loan. why not just repay your parent directly monthly?

Fraud? A bit of a leap of imagination!

I wanted to borrow the extra money on the mortgage originally, but at the time they would only lend me x when I needed y. This is despite my equity being over 40% and my mortgage only being 580 a month. I can afford more than they wanted to give at the time.

I just want as much of the outstanding balance of the debt on the mortgage as possible so I don't owe it to my parents.

muon · 28 Aug 2017 at 13:35

But it isn't it cheaper to borrow from your parents until it is remortgage time?

Do they need the money now? What are they going to get in a savings account?

If you feel bad then when you pay them back, gift them the additional interest you would have paid.

HungryHippos · 28 Aug 2017 at 13:40

Sure it's cheaper, but how can I explain it? If I can get more funds from the bank then it will reduce but not completely eliminate what I owe. I will still owe some money.

But it also means I won't owe as much and it can go onto the mortgage as a longer term debt.

It will mean I will be "debt free" quicker, except the mortgage itself and then I can optionally overpay as I want to, it's probably more of a psychological thing, but right now I am so focused on paying the money back that I am not really building any nest eggs/savings.

I don't really like owing people money if I can avoid it, never have, probably never will.

Psycho Sonny · 28 Aug 2017 at 13:46

HungryHippos said:
Fraud? A bit of a leap of imagination!

it's not though is it?

in fact you have already committed fraud by getting a mortgage in the first place and signing papers saying it was no strings attached. so the fact that it wasn't no strings attached you have fraudulently acquired a mortgage.

now you want to fraudulently acquire a loan by saying it's for a car when it's not. you do know that is exactly what fraud is acquiring something under false pretenses. it's fraud simple as.

i thought about getting a loan and saying it was for home improvement then using it to overpay the mortgage. but then i decided it wasn't worth the risk to save a few hundred quid in interest. as i could get done for it if caught.

HungryHippos · 28 Aug 2017 at 14:14

That is as it may be, but my intentions are honest, I just want the mortgage to cover as much of the difference between my equity and the house price as possible.

It's not like I want the cash to start a crack den or something!

Psycho Sonny · 28 Aug 2017 at 14:36

HungryHippos said:
That is as it may be, but my intentions are honest, I just want the mortgage to cover as much of the difference between my equity and the house price as possible.

It's not like I want the cash to start a crack den or something!

morally it may be okay but the law is still the law. my intentions are also "honest". i just want to save some interest on my mortgage.

it's like saying it's okay to commit fraud so long as nobody gets hurt. your bank can easily find out what you used the money for too. unless you take it out as cash and then give it to your parents to spend as "cash in hand".

there are money laundering checks in place, etc. it's why you and your parents signed a legal contract saying that the money was no strings attached. when it's not really. do you really want to potentially risk losing your mortgage over this?

just pay them monthly

cheesyboy · 28 Aug 2017 at 15:17

"I borrowed money from my parents for home improvement and now want to pay them back"

They'll probably call it 'debt consolidation ' and you're away.

I extended the mortgage a little to cover decorating costs that had spiralled to renovating costs. Had put it on a 0% card in advance of upcoming mortgage renewal, so that got termed as debt consolidation too.

Buffman · 28 Aug 2017 at 16:50

Psycho Sonny said:
it's not though is it?

in fact you have already committed fraud by getting a mortgage in the first place and signing papers saying it was no strings attached....

Im no lawyer, but I'm pretty sure this isn't legally considered fraud.
The banks get your parents to sign these so your parents can't legally chase you for the money (and over extend your borrowing). Regardless its not a big issue.

Just put it in as home renovation /new car.

Amp34 · 28 Aug 2017 at 19:16

As much as you don't like owing people money, have you actually spoken to your parents about this and see what they say?

Obviously we have no knowledge of your family but they may very well turn round and tell you it's a stupid idea and to it your additional funds into overpaying your mortgage while still paying hem back slowly. Definitely worth discussing with them as a first port of call before anything else.

Skillmister · 28 Aug 2017 at 19:41

The Craig said:
Im no lawyer, but I'm pretty sure this isn't legally considered fraud.
The banks get your parents to sign these so your parents can't legally chase you for the money (and over extend your borrowing). Regardless its not a big issue.

Just put it in as home renovation /new car.

It's not for that reason. It's because banks won't lend where a third party will have a financial interest in the property. Same reason occupiers have to sign to say they will have no right, interest, claim etc to the property.

Adam · 28 Aug 2017 at 21:38

I released equity for home improvements. My current lender did not require any proof of the work I was going to do. HSBC on the other hand wanted quotes from at least 3 different companies. I guess it depends who your mortgage lender is and their rules.

HungryHippos · 28 Aug 2017 at 22:35

Adam said:
I released equity for home improvements. My current lender did not require any proof of the work I was going to do. HSBC on the other hand wanted quotes from at least 3 different companies. I guess it depends who your mortgage lender is and their rules.

Who is your current lender?