Switching mortgage at end of fixed rate & releasing equity
Sorry in advance for the long message, I’m not great at keeping things short haha.
Our 5 year fixed mortgage ends in October and I’m starting to get everything in order to switch provider for a better rate. By then I’ll owe around €185,000 on the mortgage (originally €206,000), and the house should value at roughly €500,000 (I know I'll need to get it valued by the bank first).
I’m wondering about the possibility of releasing equity for debt consolidation. After getting the mortgage, we took out home improvement loans of about €60,000 and a car loan of around €15,000. They’re manageable, but I regret taking them out now...
Current monthly repayments are:
Mortgage – €715
Home improvement loans – €708
Car loan – €326
Total: €1,749
The idea would be to switch the €185,000 mortgage and release another €50,000 to clear the loans. From what I can work out, that would bring the mortgage to around €235,000, with repayments somewhere around €900–€950 a month depending on rates at the time. So overall we’d be reducing monthly outgoings by roughly half...
Based on our combined salaries, we should be able to borrow up to around €270,000 so should be no issues there..
My main concern is that we currently have no savings. We’re clearing credit card debt at the moment and should have the remaining €3,000 paid off by October. We’ve never missed repayments on the mortgage or any loans, but our bank statements definitely aren’t as clean as they were when we first applied for the mortgage as in we don't show constant savings, usually only have less than 50euro in our accounts each by the time we're paid again etc.
Would the fact that the consolidation would nearly half our current monthly outgoings be enough for the banks to accept the switch and release equity, or do we need to start showing consistent savings?
It's either show consistent savings starting now or clear credit card debt.
Thanks in advance!
Edit: we're both 32 years old if that makes a difference