Borrowing extra on my mortgage?

AndreGonzalez

Hi there everyone!

Just a quick bit of advice required please.

I am looking to purchase a new car and was having a conversation with a friend who mentioned asking my mortgage lenders for an extra 10k on top of my 150k mortgage as I'm gonna be remortgaging soon and I don't have the funds available to purchase a car just yet.

Would this require going through yet more paperwork and credit checks if I stay with my current lender?

Any advice would be great?

Thanks in advance,
Andre

marshallka

AndreGonzalez wrote: »

Hi there everyone!

Just a quick bit of advice required please.

I am looking to purchase a new car and was having a conversation with a friend who mentioned asking my mortgage lenders for an extra 10k on top of my 150k mortgage as I'm gonna be remortgaging soon and I don't have the funds available to purchase a car just yet.

Would this require going through yet more paperwork and credit checks if I stay with my current lender?

Any advice would be great?

Thanks in advance,
Andre

Some do, some don't. I have been with Intelligent Finance now for years and we have an extra £9K waiting there if we need it. Don't know why though and certainly would not have it as we are paying interest only ( have been for about 9 months) at the moment so it would be stupid. We get letters all the time asking us to take it up. We are stretched now. I would just make sure you can afford the repayments comfortably if you do it this way as remember your home is at risk...

Locoblade

Do you have enough equity in the house to release £10k and still be within reasonable LTV values? If that £10k takes you over 90% LTV then you're unlikely to get a deal at all, and even if not, you may find the additional £10k takes you over the lower LTV bands, meaning you can't get as good a deal on your entire mortgage as you would without the extra borrowing. For example if you're currently at 70-75% LTV, that extra £10k would take you towards or over 80%, so your choice of lender will become restricted as many increase their rates over 75% or 80%.

AndreGonzalez

I'm currently at about 66% LTV and on repayments

Heyman_2

If the lender deems that you have enough equity in your house to release, they will likely allow you to do this, but given current events be prepared for them to say no.

When you say 66%, what are you basing that on. A recent valuation or your purchase price?

dimbo61

Please dont do it !
You will be repaying this extra borrowing years after the car is scrap.
Either keep your existing car or part ex for a new car with 3/5 years interest free credit.
If you cant afford the payments on a new car via finance then the car is too expensive.
Look for a six months old / 1 year old car and save thousands
borrowing £10k on your mortgage will cost you £20k over a 25 year mortgage

AndreGonzalez

I'm basing the LTV on the figure from 2005 when I purchased the house. I know house prices have fallen over the past few months or year but house prices in my area are still the same and the 2005 value of 225k is now nearing 275k.

Locoblade

dimbo61 wrote: »

Please dont do it !
You will be repaying this extra borrowing years after the car is scrap.
Either keep your existing car or part ex for a new car with 3/5 years interest free credit.
If you cant afford the payments on a new car via finance then the car is too expensive.
Look for a six months old / 1 year old car and save thousands
borrowing £10k on your mortgage will cost you £20k over a 25 year mortgage

Agreed if you intend on paying it back over the full term of the mortgage, but if you're just using it to access a lower interest rate, and will (if allowed) overpay to pay it off in a few years, then its not an issue.

That raises the point that if you plan on doing the latter, make sure the lender will allow you to overpay by that amount.

Probably not really the right forum, but its also worth noting that "Interest Free" on new cars is rarely that in reality, because you generally have to pay the full RRP asking price in order to qualify. I bought a new car about 5 years ago and by negotiating a deal on the car's asking price then getting a normal bank loan, that still worked out less overall outlay (including interest payments on the loan) than taking up the interest free offer but paying the full asking price. In mortgage terms I guess its not dissimilar to the low rates and high fees sitation, as you pay the "interest" one way or other.