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  • FIRST POST
    • Cotta
    • By Cotta 17th May 17, 5:08 PM
    • 2,283Posts
    • 937Thanks
    Cotta
    Releasing Money from a Mortgage.
    • #1
    • 17th May 17, 5:08 PM
    Releasing Money from a Mortgage. 17th May 17 at 5:08 PM
    Hi All,

    Originally posted on the incorrect forum.

    A friend of mine has a house valued around 100k for which he paid 80k. At present he has around 40k left on a mortgage of 3.29%.

    He wants to increase his mortgage to around 55k and use 9k of the additional mortgage to pay off a loan for which he is paying 9% interest on. He wants to use the final 6k to build up his savings at rates above 3.29%.

    I was not sure what to advise as I didn't even feel it would be possible. I am very against the 6k being used for savings as it will be tricky beating the 3.29% interest rate he will be charged on this.

    Has anyone any better advice than what I was able to provide? I feel that this is not a wise move on his part.
    Last edited by Cotta; 17-05-2017 at 5:19 PM.
Page 1
    • kingstreet
    • By kingstreet 17th May 17, 5:13 PM
    • 31,302 Posts
    • 16,715 Thanks
    kingstreet
    • #2
    • 17th May 17, 5:13 PM
    • #2
    • 17th May 17, 5:13 PM
    What makes him think the new mortgage rate will be 3.29%?

    A remortgage at 69% LTV is going to have a lower rate and if he chooses an offset product, he can repay his loan and put the 6k in the offset account and pay mortgage interest on only the 49K which is actually outstanding.

    If he really does want to increase his current mortgage with his current lender, a further advance/additional borrowing and not a remortgage, the rate may well be more than 3.29%.

    Frankly, I couldn't be bothered personally but loads seem to find such distractions satisfying.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Cotta
    • By Cotta 18th May 17, 9:39 AM
    • 2,283 Posts
    • 937 Thanks
    Cotta
    • #3
    • 18th May 17, 9:39 AM
    • #3
    • 18th May 17, 9:39 AM
    What makes him think the new mortgage rate will be 3.29%?

    A remortgage at 69% LTV is going to have a lower rate and if he chooses an offset product, he can repay his loan and put the 6k in the offset account and pay mortgage interest on only the 49K which is actually outstanding.

    If he really does want to increase his current mortgage with his current lender, a further advance/additional borrowing and not a remortgage, the rate may well be more than 3.29%.

    Frankly, I couldn't be bothered personally but loads seem to find such distractions satisfying.
    Originally posted by kingstreet

    Yes I'm not sure of the full logic, I think on his 3.29% mortgage he is able to release some additional funds and still be on the same rate.

    I'm really not sure if it's a wise move either but it's something he's looking into.
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