Re-mortgage now or wait?
Discussion
Sarnie said:
LR90 said:
Genuine question — does this apply if you move lenders?
As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?
I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.
The difference is that when you buy a house, the deposit comes from your own funds.As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?
I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.
It's also worth noting that even as a FTB buyer, you have to tell and evidence to the lender where your deposit has come from, to satisfy AML requirements.
When you remortgage a property and want additional lending, you are asking the lender to borrow you the money which in most cases is increasing their LTV and therefore their risk, hence why they will want to know what you are doing with the money.
I've got 60k against a 150k property. I've got to jump through hoops to get a 10k advance. But it should be relatively trivial to move to a different lender with a 70k mortgage (I think??)
johnboy1975 said:
Sarnie said:
LR90 said:
Genuine question — does this apply if you move lenders?
As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?
I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.
The difference is that when you buy a house, the deposit comes from your own funds.As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?
I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.
It's also worth noting that even as a FTB buyer, you have to tell and evidence to the lender where your deposit has come from, to satisfy AML requirements.
When you remortgage a property and want additional lending, you are asking the lender to borrow you the money which in most cases is increasing their LTV and therefore their risk, hence why they will want to know what you are doing with the money.
I've got 60k against a 150k property. I've got to jump through hoops to get a 10k advance. But it should be relatively trivial to move to a different lender with a 70k mortgage (I think??)
johnboy1975 said:
Sarnie said:
LR90 said:
Genuine question — does this apply if you move lenders?
As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?
I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.
The difference is that when you buy a house, the deposit comes from your own funds.As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?
I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.
It's also worth noting that even as a FTB buyer, you have to tell and evidence to the lender where your deposit has come from, to satisfy AML requirements.
When you remortgage a property and want additional lending, you are asking the lender to borrow you the money which in most cases is increasing their LTV and therefore their risk, hence why they will want to know what you are doing with the money.
I've got 60k against a 150k property. I've got to jump through hoops to get a 10k advance. But it should be relatively trivial to move to a different lender with a 70k mortgage (I think??)
I applied to increase my mortgage from around 25% to 40% LTV (all well within affordability criteria), as the money was to support a deal on another property, they said NO (been with the bank for around 35 years).
Applied again 6 months later, same amount, but this time to do a full refurb of our house. Once more lots of questions, hoops to jump, including a surveyor valuation (even though the LTV would remain under 40%), also had to provide itemised costing of work to be undertaken, showing contingency etc.
Got approved, however I've sat on the offer for months, holding off on the refurb, offer expires next month.
johnboy1975 said:
Yes, but if you increase your (their!!) risk by a trivial amount, still well with the LTV cut off, why do they care?
I've got 60k against a 150k property. I've got to jump through hoops to get a 10k advance. But it should be relatively trivial to move to a different lender with a 70k mortgage (I think??)
Why do they care? Surely thats not a serious question..........I've got 60k against a 150k property. I've got to jump through hoops to get a 10k advance. But it should be relatively trivial to move to a different lender with a 70k mortgage (I think??)
People are very quick to forget 2008 and the years before it when lenders signed off anything the LTV was low or you said you could afford it. It didn't work out well.........
Sarnie said:
Why do they care? Surely thats not a serious question..........
People are very quick to forget 2008 and the years before it when lenders signed off anything the LTV was low or you said you could afford it. It didn't work out well.........
........apart from for the very large number of people whose property wealth originates from those days and that "lax" lending era.....People are very quick to forget 2008 and the years before it when lenders signed off anything the LTV was low or you said you could afford it. It didn't work out well.........
Wilmslowboy said:
I went through all this in the past year.
I applied to increase my mortgage from around 25% to 40% LTV (all well within affordability criteria), as the money was to support a deal on another property, they said NO (been with the bank for around 35 years).
We did something similar coming on two years ago (before interest rates went mad, and before Ukraine was invaded) - I went from 25% LTV to 60%, borrowing enough to buy the property bordering our back garden. It seemed surprisingly easy to get the borrowing then - a couple of video calls, and an in-person valuation of our main property. I applied to increase my mortgage from around 25% to 40% LTV (all well within affordability criteria), as the money was to support a deal on another property, they said NO (been with the bank for around 35 years).
The cash sat in my savings account for a couple of weeks during the buying process, and I have to admit that I did think about what cars I could have bought instead
Chris Type R said:
We did something similar coming on two years ago (before interest rates went mad, and before Ukraine was invaded) - I went from 25% LTV to 60%, borrowing enough to buy the property bordering our back garden. It seemed surprisingly easy to get the borrowing then - a couple of video calls, and an in-person valuation of our main property.
The cash sat in my savings account for a couple of weeks during the buying process, and I have to admit that I did think about what cars I could have bought instead
Still surprises me when I see people complaining about a lending decision citing "I've been with them for 35 years".....The cash sat in my savings account for a couple of weeks during the buying process, and I have to admit that I did think about what cars I could have bought instead
Clients are the most unloyal they've ever been. Lenders are no different. It's probably at least 30 years plus since the length of time you'd been with a bank actually had any positive impact on a lending decision.
You can either satisfy the lending criteria or you can't. Whether you've been with them 35 years or 5 minutes. When clients are able to get a cheaper rate elsewhere, hardly any will stay because they've been with the lender for an extended period of time.....
The above two examples shows that one lender accepted an application for further borrowing, another didn't.
Neither decision was accepted or declined because of;
- The LTV
- The number of years you've been with the lender
Nationwide for example, won't lend additional funds to buy a BTL. Doesn't matter if your LTV is 5% or you have been with them for 35 years, it's just a straight no. Other lenders will do it, no problem......
T_S_M said:
So say I want to borrow £25k for a new car. Would it not make more sense to add it on to the mortgage at 4-5% vs a bank loan at 8-10%? Fix for 5 years, then sell the car and pay off that £25k you borrowed on the mortgage?
Or am I being a bit thick?
The 'new kitchen' manovre. Or am I being a bit thick?
Where it goes wrong is the same place credit card debt goes wrong, in that the average punter forgets to get round to paying it off on the terms that they originally agreed with themselves.
£25k@5% costs over £30k across 25 years but £6k over 5.
£25k @8% over 5 costs £10k
You obviously need to take into account whether the debt being backed by the home puts you into a worse LTV or risk of a worse LTV and consider any fee elements etc but the basic maths is that mortgage debt is cheaper and the largest risk is a failure of personal discipline.
Some rate drops coming through https://www.theguardian.com/money/article/2024/may...
Chris Type R said:
Some rate drops coming through https://www.theguardian.com/money/article/2024/may...
Uk economy won’t take higher rates for long , will cripple it. Tagteam said:
Chris Type R said:
Some rate drops coming through https://www.theguardian.com/money/article/2024/may...
Uk economy won’t take higher rates for long , will cripple it. ONS to release UK inflation %-numbers on Wednesday, possibly back to 2.5/3%, BOE change should reflect on that, however overall cost of living is still embedded, and the increasing possibility of stagflation, and general consumer arrears are starting to appear (especially in the large loan, high income bracket). Some lenders are very much pricing for losses.
Should see swap rates start to fall with the predicted inflation news.
As per your two resident brokers on here, no harming in securing your rate in advance...
If inflation is under control, trackers could well be the play.
Should see swap rates start to fall with the predicted inflation news.
As per your two resident brokers on here, no harming in securing your rate in advance...
If inflation is under control, trackers could well be the play.
We're still ultimately going to track the FED. U.K. inflation should fall because the energy price cap has been lowered and mortgage rates fell 1% over the previous period. Petrol has risen while oil hasn't because the U.K. refineries are allowed to sell t world prices. It would be nice if we forced them to sell at local prices now it looks like world prices are always going to be higher. Likewise, with renewables, it would be nice if the practice of allowing that to be sold at the highest spot price was ended sooner rather than later.
Caddyshack said:
Tagteam said:
Chris Type R said:
Some rate drops coming through https://www.theguardian.com/money/article/2024/may...
Uk economy won’t take higher rates for long , will cripple it. Deesee said:
ONS to release UK inflation %-numbers on Wednesday, possibly back to 2.5/3%, BOE change should reflect on that, however overall cost of living is still embedded, and the increasing possibility of stagflation, and general consumer arrears are starting to appear (especially in the large loan, high income bracket). Some lenders are very much pricing for losses.
Should see swap rates start to fall with the predicted inflation news.
As per your two resident brokers on here, no harming in securing your rate in advance...
If inflation is under control, trackers could well be the play.
I would go for a tracker as the fixed rates don’t yet price in much of a fall. Should see swap rates start to fall with the predicted inflation news.
As per your two resident brokers on here, no harming in securing your rate in advance...
If inflation is under control, trackers could well be the play.
Tagteam said:
I cannot see rates going up now , they will fall from here and Wednesday inflation figures should show a drop in the overall inflation rate .
It seems unlikely that U.K. mortgage rates will trend above BoE+margin I'd agree. Personally, I think we would be flattering ourselves if we thought U.K. inflation data has much, if any relevance to U.K. mortgage rates. U.K. mortgage rates are fundamentally defined as the BoE rate + or minus the amount the rest of the world thinks US interest rates will change over the period of the loan.
So, this would be 5.25 less the .75 the market thinks the US Fed will be dropping over the next 24 months.
I don't think they even bother prodding Bailey awake and updating his programming for a U.K. inflation data event, he's usually just rebooted a few minutes after the Fed says something.
Tagteam said:
Caddyshack said:
Tagteam said:
Chris Type R said:
Some rate drops coming through https://www.theguardian.com/money/article/2024/may...
Uk economy won’t take higher rates for long , will cripple it. super duper pissed off at my broker. argh!
Question is, if I go direct to virgin money for a product transfer tomorrow, will they get me on to the new rate by 30 June in time for my existing fixed rate expiry on 30 June?
I can go in branch and sign anything they need to
I will be damned if I let the useless broker get any fee on this deal. He has been an absolutely lazy, disorganised prick.
Question is, if I go direct to virgin money for a product transfer tomorrow, will they get me on to the new rate by 30 June in time for my existing fixed rate expiry on 30 June?
I can go in branch and sign anything they need to
I will be damned if I let the useless broker get any fee on this deal. He has been an absolutely lazy, disorganised prick.
Gassing Station | Finance | Top of Page | What's New | My Stuff