The triangle theory

This week I almost regretted opening my eyes to the way we deal with money. It was certainly easier when we were living the money comes /money goes lifestyle. But we've spent the week digging through the pile of dirt out the back and it's given us plenty of time to reflect. We came back to our rock climbers theory - you need 3 firm footings or a strong triangle hold to climb a mountain - so we applied this to our mortgage application.

The borrowing triangle should look like this;

1. strong credit history
2. Regular income
3. good deposit

Our credit history, due to not paying our mortgage on time is weak, the regularity of our income - or more to the point how we deal with the irregularity of our income is weak and our deposit or the capital in our house (due to it being undervalued because of the renovation) is also weak. We have no firm footings so this got me thinking...

The loan company were taking their sweet time with processing the application and we only had the choice of one lender. We were approaching it from only one POV - desperation! To strengthen the points in our triangle I had to think outside the square.

1. Commit to paying our mortgage on time every fortnight to strengthen our credit rating. Tick
2. Pay ourselves a regular income from the business. Tick
3. Complete the renovations. hmmm

1 & 2 are relatively easy as we have the income we just need to change the way we deal with it. No 3 took some extra thought. So...we approached my bank about extending my personal loan and believe it or not, they agreed!!!

Today we signed on the dotted line. This means that we are committed to completing by June. The next 4 weeks (as we are already 2 weeks into the project) are about the original list and then we'll take a couple of months (on and off) to put all the finishing touches on and put the pool in.

Once the reno is complete we will have tripled the capital in the property. In June we also receive our next mortgage statement and can show a tax return for both of us. This will completely change the banks perceive us!

Wow, what a week. The stress and anxiety nearly got the better of me. I had no idea this part of it was going to be so hard. It's been a very big learning curve though but I think I might be getting the hang of this money thing...

L x