Mortgages and additional borrowing
Discussion
Mortgage is currently 35% LTV - monthly payments all under control - approx 15 years left.
I'm looking to borrow an additional amount that will take me to about 50% LTV. I can manage the additional payments.
Currently on a fixed rate of 4.49% until August 2025. ERC is 1%.
I'm looking to start an extension around May next year.
What's the best way to proceed - take a second mortgage with the same lender, so I have two products on different rates? Or pay the ERC and find a 50% LTV with a new lender? Or delay the build until after August so no ERC to pay? Or something else entirely.
(I'm with Santander if that makes any difference).
I'm looking to borrow an additional amount that will take me to about 50% LTV. I can manage the additional payments.
Currently on a fixed rate of 4.49% until August 2025. ERC is 1%.
I'm looking to start an extension around May next year.
What's the best way to proceed - take a second mortgage with the same lender, so I have two products on different rates? Or pay the ERC and find a 50% LTV with a new lender? Or delay the build until after August so no ERC to pay? Or something else entirely.
(I'm with Santander if that makes any difference).
Consigliere said:
Mortgage is currently 35% LTV - monthly payments all under control - approx 15 years left.
I'm looking to borrow an additional amount that will take me to about 50% LTV. I can manage the additional payments.
Currently on a fixed rate of 4.49% until August 2025. ERC is 1%.
I'm looking to start an extension around May next year.
What's the best way to proceed - take a second mortgage with the same lender, so I have two products on different rates? Or pay the ERC and find a 50% LTV with a new lender? Or delay the build until after August so no ERC to pay? Or something else entirely.
(I'm with Santander if that makes any difference).
You havent shared the balance value to enable anybody to do the maths.I'm looking to borrow an additional amount that will take me to about 50% LTV. I can manage the additional payments.
Currently on a fixed rate of 4.49% until August 2025. ERC is 1%.
I'm looking to start an extension around May next year.
What's the best way to proceed - take a second mortgage with the same lender, so I have two products on different rates? Or pay the ERC and find a 50% LTV with a new lender? Or delay the build until after August so no ERC to pay? Or something else entirely.
(I'm with Santander if that makes any difference).
Need to do the maths to work that if you can you get a new deal sufficiently better than 4.49% to offset the 1%.
If your rate expires in August then you can start your mortgage application in February. That way you can apply early, get your funds secured, all on one rate, with one lender, one payment, no ERC's.............assuming then that you can wait to receive the funds in August or start in May and fund the initial payments another way whilst waiting for your funds to land in August. 
How certain are you about the May date? Unless it's all sorted and locked in there's a decent chance it gets pushed back anyway and then delaying to August seems a solid option. To be honest, I'm not sure delaying to August won't be the best option anyway, it's only a few months.
In terms of the mortgage I would recommend remortgaging everything onto an Offset Mortgage, borrow as much as you can without increasing the interest rate and then offset it all so you're only paying interest on the bit you actually owe but you have instant access to the funding for the extension as and when you need it.
I did this for our loft conversion and in the end my wife earned the money faster than I could spend it so we didn't actually need to extend the mortgage and it would have been annoying having loads of excess borrowing racking up interest charges. Now we have a healthy chunk of equity in the house that is available in any emergency, or when I get round to a kitchen extension, and we can just get on with that when we want without having to think about financing it. The cost is something like 0.1-0.2% on our mortgage rate, but we've made that back many times over by being able to pay down the mortgage as and when we like.
In terms of the mortgage I would recommend remortgaging everything onto an Offset Mortgage, borrow as much as you can without increasing the interest rate and then offset it all so you're only paying interest on the bit you actually owe but you have instant access to the funding for the extension as and when you need it.
I did this for our loft conversion and in the end my wife earned the money faster than I could spend it so we didn't actually need to extend the mortgage and it would have been annoying having loads of excess borrowing racking up interest charges. Now we have a healthy chunk of equity in the house that is available in any emergency, or when I get round to a kitchen extension, and we can just get on with that when we want without having to think about financing it. The cost is something like 0.1-0.2% on our mortgage rate, but we've made that back many times over by being able to pay down the mortgage as and when we like.
paulrockliffe said:
How certain are you about the May date? Unless it's all sorted and locked in there's a decent chance it gets pushed back anyway and then delaying to August seems a solid option. To be honest, I'm not sure delaying to August won't be the best option anyway, it's only a few months.
In terms of the mortgage I would recommend remortgaging everything onto an Offset Mortgage, borrow as much as you can without increasing the interest rate and then offset it all so you're only paying interest on the bit you actually owe but you have instant access to the funding for the extension as and when you need it.
I did this for our loft conversion and in the end my wife earned the money faster than I could spend it so we didn't actually need to extend the mortgage and it would have been annoying having loads of excess borrowing racking up interest charges. Now we have a healthy chunk of equity in the house that is available in any emergency, or when I get round to a kitchen extension, and we can just get on with that when we want without having to think about financing it. The cost is something like 0.1-0.2% on our mortgage rate, but we've made that back many times over by being able to pay down the mortgage as and when we like.
The issue in the current market is that Offset rates are circa 1% above standard mortgages, so you need to be sure it would be used in the right way otherwise you are just left with a really expensive mortgage.....In terms of the mortgage I would recommend remortgaging everything onto an Offset Mortgage, borrow as much as you can without increasing the interest rate and then offset it all so you're only paying interest on the bit you actually owe but you have instant access to the funding for the extension as and when you need it.
I did this for our loft conversion and in the end my wife earned the money faster than I could spend it so we didn't actually need to extend the mortgage and it would have been annoying having loads of excess borrowing racking up interest charges. Now we have a healthy chunk of equity in the house that is available in any emergency, or when I get round to a kitchen extension, and we can just get on with that when we want without having to think about financing it. The cost is something like 0.1-0.2% on our mortgage rate, but we've made that back many times over by being able to pay down the mortgage as and when we like.
Sarnie said:
If your rate expires in August then you can start your mortgage application in February. That way you can apply early, get your funds secured, all on one rate, with one lender, one payment, no ERC's.............assuming then that you can wait to receive the funds in August or start in May and fund the initial payments another way whilst waiting for your funds to land in August.
I think this might be the best bet. I didn't really want to but I can dip into my ISA and fund the work and I guess I can repay the ISA once the mortgage comes in (without penalty I think).Consigliere said:
Sarnie said:
If your rate expires in August then you can start your mortgage application in February. That way you can apply early, get your funds secured, all on one rate, with one lender, one payment, no ERC's.............assuming then that you can wait to receive the funds in August or start in May and fund the initial payments another way whilst waiting for your funds to land in August.
I think this might be the best bet. I didn't really want to but I can dip into my ISA and fund the work and I guess I can repay the ISA once the mortgage comes in (without penalty I think).
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