(edit title) Negotiating with a bank for house loan House loan and furnishing/renovation Options

[sndhpll]

Hi,

I have bought a house. Paying up the 15% + registration cost and the rest 85% on the loan.

I asked the bank for a loan for furnishing the house before moving in. But they say that is not included in the house loan and if I borrow that it would be at a higher cost.

I was more thinking that as I am customer with the bank for the house loan , the extra loan would come at a cheaper rate.

Instead of furnishing, if I say that the amount is for renovation would that be a case for a lower interest rate


Can somebody suggest what is a good negotiation tactic here?

Tack!

[skogsbo]

In a rush now, but you need to search here or ask them about top and bottom loan. Basically you are at your limit of what they are prepared to lend you secured, Unsecured will come at a higher rate, you might get minor discount for being a current customer, but I would shop around. Loyalty doesn't always bring a better deal. Personally don't borrow much if anything, cardboxes from unpacking equal tables, cushions become seats, mattresses are fine on the floor for a while. You can then pick up stuff as and when you find it cheap and don't pay any premium borrowing rates.

Antique and 2nd hand shops should get you some kitchen stuff. The rest; hint at some housing warming presents from friends.

[Puffin]

They are only allowed to loan you up to a certain percentage at a cheaper rate as furnishings would be an unsecured personal loan as second hand furnishings keep very little value

You can shop around but you wont get a personal loan for furnishings at a mortage rate - if you are union member sometimes they have discounts on personal loans

[Yorkshireman]

Doesn't matter what You call it, the bank can only give you either a loan against another asset? or unsecured (a few percentage points higher rate).

According to Finance Dept. regulations the banks are only allowed to lend up to 85% the value of the property that is used as security. (remember that phrase )

If You can survive without all the fine and dandy for a while, depending how prices move, the normal (dare I say it!) Swedish way, definately supported by most banks, is to then re-value the property, and if it is higher the existing mortgage come below the 85%.

And, if You managed to shave a few hundred of the price when You bought it by excellent negotiations, then it may already be worth more than the original amount you were paying!

btw... it is 85% for a reason, to max out credit when interest rates are low ... can cause a big problem later when they rise rapidly!. Luckily right now it looks as if they will go down a little more during the next year, but after that it will keep rise. If the bank did their job right, they will have already tested your finances for double + a few percentage points on interest, just to be sure you can clear it?

[John.Smith]

What you are asking for will be classed as a personal loan which comes at a higher interest rate. The only negotiation you may be able to bargain for is if this loan can be applied as a toplån on the mortgage. This means it is a private loan associated to the house for renovations or upgrades (think new windows, heating system etc..). The toplån is usually offered at a discounted interest rate compared to a normal private loan but the rate will still be higher than the mortgage lending rate.
The toplån + mortgage lån cannot exceed the market price of the house combined.In effect you are asking for a toplån the same value as your 15% deposit.

Hope this makes sense.

[Yorkshireman]

The toplån + mortgage lån cannot exceed the market price of the house combined.In effect you are asking for a toplån the same value as your 15% deposit.

This has changed now. You cannot secure a top loan with the property if it is already at 85% of value. What You are looking for is a Blancolån ... basically a private loan, maybe you need security, which cannot be the property, or someone else to act as guarantor if the bank won't give You the personal loan.

It is more common now that since there is an 85% limit on loans against property, that the banks already have included the top loan into the calculation eg. 15% cash-in, 75% Bottom loan + 10% top loan.

It depends how the mortgage was structured.

I still suggest, if You want to include it into the mortgage, then wait a little and have the property re-valued. Put Your current loans onto 3 months max fixed interest, and use the possibility of moving the loans to another bank as part of the negotiations, and/or in negotiating with another bank

[Essingen]

I was more thinking that as I am customer with the bank for the house loan , the extra loan would come at a cheaper rate.

Exactly why should the bank give you a loan at a cheaper rate when there is no security attached to the loan?

[sndhpll]

@skogsbo- Thanks , would have done so sitting and lying on the floor or mattresses, but have a small baby of 3 months, so need some furnishing, so have to opt for a small loan.
@Puffin - Thanks , not at mortage rate but at least a bit less than a normal customer
@ Yorkshireman- Can survive without fine & dine, thats how a place to live came about but still need a small loan.
@ John Smith- Thanks, but Yorkshire man is right.
@Essingen- If they do not want me to shop around with other banks and lose me as a customer

[skogsbo]

@skogsbo- Thanks , would have done so sitting and lying on the floor or mattresses, but have a small baby of 3 months, so need some furnishing, so have to opt for a small loan.

So you need a baby bath, cot and a changing table.

1000-1500kr will see you the baby bath and cot new. Cardboard box with a plastic sheet beneath a towel, equals a wipe clean disposable changing table. But even a proper one won't cost much at Ikea etc. or just ask around at nursery/dagis, put a wanted notice up, offering 500kr for one in good condition. There is bound to be a steady flow of 2/3year old whose parents would love some space in their house back.

Spending a fortune on baby gimmicks is great, but when you get to child 2 or 3, you'll be older and wiser. Plus, at 3mths they won't remember where they slept, played or had their nappies changed and that pretty much all you'll do for a while! A big cushion or bean bag on the floor is all you need to lounge with the kids/s and read with them etc.

You have many months before they are self supporting and need some form of high chair at a table etc. So you can source stuff little and often, as and when you find it at a bargain price.

Think laterally and avoid those big purchase for sake of it.