Moving house - mortgage advice

[Chicken Chaser]

We are moving house soon. Had some meetings with an IFA. It seems as we are on a Nationwide Mortgage on a 2% above BR, its in our interests to port this onto our next mortgage and just add to it with another loan from the Nationwide at a higher rate.

We are on 80%LTV, most of it is in equity in the house, some of it cash in the bank. I was planning on adding all the cash from the bank to the mortgage this eve but then started thinking whether it was a good idea.

We have overpaid by several thousand these last few years to be able to get a good deposit, and we have an overpayment reserve. We can 'borrow back' the money for anything we require.

Is there anything wrong with me taking the money out of the current mortgage as cash raising the loan again on the 2% above BR, and then putting it into the new rate which has been calculated at 3.54%? The higher % loan is smaller than the 2.5% chunk by about half currently, but I could get it reduced down quite a bit if this cash can be moved about.

[Sarnie]

The more you pay off the mortgage, the more you will need to borrow at the higher rate.....if they will let you take back what you have overpaid then do that too as long as they borrow it back to you at the same rate.

Edited by Sarnie on Wednesday 3rd April 08:58

[dibblecorse]

Check the terms carefully, they may stipulate that overpayments are applied to the lower interest portion first if its a combined mortgage with 2 rates, also even if they are separate products then they may still stipulate that overpayments go to one account in preference to another.

[Sir Bagalot]

NW won't stipulate which loan you can pay overpayments into, it's up to you. You need to check how much you're allowed to overpay per month/per annum.

I'm assuming you've already checked how much more you can borrow and LTV etc

[Chicken Chaser]

Sir Bagalot said:

NW won't stipulate which loan you can pay overpayments into, it's up to you. You need to check how much you're allowed to overpay per month/per annum.

I'm assuming you've already checked how much more you can borrow and LTV etc

Thanks, yeah we are well under budget so no probs with LTV or borrowing more. As far as I understand it, if i've paid back £15000 in overpayments, then that is my reserve and I can take that back out, and the monthly repayments are simply re-calculated. All I planned to do was take out that £15000 and put it into the other portion, so same LTV, same amount to pay back but less of it in the higher interest portion.

I'll have a chat with my MA tomorrow and see if it can be done and whether its best to do beforehand or after the move.