Pre-emptive remortgaging?

[trixical]

I have been in a 5 year fixed deal for my mortgage which ends Feb 2016, I am in the lucky position that I have been overpaying and will pay it off in full the following month. My debate is that I am looking to move in the next year or two when something suitable comes up and there will be a cost to change.

My gamble didn't pay off in my last fix so I have paid more than if I had remained on the SVR but I accept that (having the guarantee of a fixed amount each month sat better with me and also enabled me to work out what level of overpayments to make around the length of my fixed deal and amount owed) but now knowing that there is going to be a cost to change in my next move and that rates are currently low but likely to increase before a move I have been considering my options and am thinking the way to go is potentially to remortgage this house a month or two after I pay off my current product then port when the move comes about. This would set me a reasonable budget for my hunt but also take the benefit of the current low rates.

Does this sound a reasonable idea?

My current product is with Nationwide and I don't see any benefits of keeping it open (have also gone back through threads from the last few months & can see n/wide are a delightful bunch when it comes to the new mortgage rules and existing customers remortgaging if you don't fit their new box). It looks like I could get ~3% fixed for 10 years on a 15 year term if I went their direction again.
Current house is worth £230-240k+ & would be looking at ~£100k remortgage amount.

[Sarnie]

Are you saying that your balance is nearly nil and you want to take out borrowing to the level you think you'll need when you move, just to be able to port it when you do??

[trixical]

Sarnie said:

Are you saying that your balance is nearly nil and you want to take out borrowing to the level you think you'll need when you move, just to be able to port it when you do??

Yes

[Sarnie]

trixical said:

Yes

What will you tell the lender the additional borrowing is for?

[trixical]

Sarnie said:

What will you tell the lender the additional borrowing is for?

Exactly what I've explained here, I'm not intending to go off & use the money for anything else and equally not intending to take on the additional monies until I have paid off my current product.
I appreciate your guidance Sarnie.

[Sarnie]

trixical said:

Exactly what I've explained here, I'm not intending to go off & use the money for anything else and equally not intending to take on the additional monies until I have paid off my current product.
I appreciate your guidance Sarnie.

It just doesn't really make sense and won't to a lender.......a lender isn't going to be keen to lend you secured lending so that you can bank it ready for your next property move if/when that happens at an unknown time in the future.

Edited by Sarnie on Monday 9th November 10:49

[trixical]

OK noted
I presume lenders would be fine though if someone in the same position asked for the same amount & said it was for renovation/car purchase/extension build/buy to let deposit?

Believe me I'd rather find something & move sooner than later but just at this present time I can't put an exact timescale on it

Edited by trixical on Monday 9th November 10:48

[JungleJim]

Why not just wait until you find what you want to buy - BOE have said rates aren't likley to rise for year

[AyBee]

Are we talking debt or equity here? As I understand it, you have £140k equity in a £240k property - if you wanted to take out your equity and stick that in an account, I can't see the issue and then you get a 90% mortgage, i.e. £216k debt and £24k equity. You'd then be taking out £116k to stick into a bank account for a while, you then port over your mortgage and add the equity back in (and get to £356k)? I might be miles off the mark with this assumption?

The only issue with the above is that the rate you'll get on your 90% mortgage will not be anywhere near as good as it would be with your current debt:equity split...

[trixical]

AyBee
You've got it except come march 2016 I will have 100% equity (no debt, mortgage currently standing at sub 5k) so in taking the 100k then would have 100k debt 140k equity which should keep me in the realm of good LTV for mortgage deals & LTV would further improve once the new property is purchased.

JungleJim said:

Why not just wait until you find what you want to buy - BOE have said rates aren't likley to rise for year

In an ideal world Jim but I'm considering all options as I see them

Edited by trixical on Monday 9th November 14:23

Edited by trixical on Monday 9th November 14:31