Home improvement financing

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Getting the home improvement loan
When we made the decision to renovate our home we knew we’d have to apply for a home improvement loan, preferably of course with low interest rates.

We are not cash rich by any means, but we don’t have bad credit and we do own a property in London that I bought 10 years ago during a slight dip in the property market and just before the sustained house price boom of the late 90’s to the mid naughties, so we decided to see if we could qualify to raise money by re-mortgaging.

The was just before the credit crunch grew its head of steam so things were a little easier and as it turned out, by switching to a new mortgage company and to a lower interest rate, we effectively raised the entire home improvement loan while slightly reducing our repayments. It’s a tracker mortgage, just below the Bank of England base rate.

Bloody conveyancing lawyers!
The re-mortgage agreed, the fun began. You see lawyers for mortgage companies, estate agents, buyers and sellers of property have contrived to milk the arcane system of property ownership in this country for all it’s worth. To explain briefly, my property is a house comprising two apartments (OK, flats to us Brits). I live on the ground floor and, as is common in these situations, I share the freehold of the property with the owner of the upstairs flat, while each of us has a 99 year lease on our own floor.

I own you, you own me
In a nutshell, we both own the whole property, while each of us has a lease for the part that we actually consider our own. In other words, each of us is each others and our own landlords! This is clearly a legal bonanza, because all sorts of stuff needs agreeing. Before I moved in, the last two letters between our lawyers concerned the placement of our respective garbage cans. The sort of thing you would have thought any two adults would have been able to resolve without paying £40 a letter for.

You couldn’t make this stuff up!
In the case of our re-financing, the laywers acting for the mortgaging company managed to string out their costs thus:

1) They wrote a letter to the owner of upstairs to which he had to respond, confirming that he had no objection to my re-mortgaging. Why on Earth would he? It’s none of his business! He lives in France, but they wrote to him here, so that slowed things up.

2) They wrote a letter to my wife, to which she had to respond, confirming that she had no objection!!!

3) The wrote a letter to me, to which I had to respond confirming that I had no objection to myself re-mortgaging!!!!

4) The terms under which the owner of upstairs and I lease our properties from each other are that we each have to pay each other £1 a year in rent. The more astute among you will note that our rents cancel each other out. They’re a token of course, commonly known as “peppercorn rent”. Indeed, we can arrange to have the rents commuted to one peppercorn each way if we so desire, with, of course, the “assistance” of our lawyers. Needless to say we haven’t bothered, but astonishingly, the mortgage company’s lawyers wrote to the upstairs owner (naturally at the UK address instead of where he actually lives) to get him to confim that I wasn’t in arrears with my rent! Aside from the fact that the most I could have been in arrears at the time was £9, the incredible thing is that anyone with half a brain would notice that simply by neither of us ever doing anything I couldn’t possibly be in arrears!

The whole process took some 5 months from the time the loan was originally agreed. Which was a good job really, because it was during that time that we found out about and decided that we wanted to install and English Rose Kitchen.