Renewal + further loan - stick or twist?

cgray25

It's seems nothing's ever easy when dealing with lenders, after a 20 minute phone call my head's a bit fried trying to sort the wheat from the chaff in their conversation - and it would seem I need to make a decision in the next couple of days. The quick and simple of it is this; I moved into a new property last year for which I ported my existing A&L mortgage over to and borrowed £60K off my parents to make up the rest.

My current deal is due to expire on May 1st - I've been sent out the offer for the 3.95% 5yr fixed £995 fee (which I gather is pretty good), however, I'd also like to now take 60k out/add 60k onto my mortgage to pay back my parents. I thought this would be a simple case of 60K gets added onto the mortgage and I pay this all together at the 3.95% offered.

But it's not that easy, it would seem the 3.95% deal has now been withdrawn so they say whilst I would be able to pay the original ported mortgage at 3.95%, the best rate they could offer me on the additional 60K would be a 4.89% fixed (not quite so good).

At this point I have no idea what's in my best interest - it would seem the extra 60k is being treated as entirely separate so do I send away the papers for the original mortgage meanwhile to secure the 3.95%?

Or should I think about starting afresh by looking to go with another lender for it all? (it seems like I'll be weighing up the savings made on the 3.95% deal against the fees incurred/higher % on the further loan ).

Or, as it would seem the 60k will be separate, do I keep the original mortgage with A&L and look elsewhere to take out a 2nd mortgage for the 60K?

Or is going with the additional funds at 4.89% my best option?

Any thoughts would be appreciated.

_Andy_

Options are 1)Do it all with your current lender or 2) If you can get a better deal, look elsewhere.

Keeping the main mortgage with the current lender and securing the rest elsewhere would mean a much higher interest rate as the extra would be a secured loan rather than a 1st charge mortgage.

beecher

You need to work out what your LTV will be if you look elsewhere with the additional 60k - if it is above 75% you might end up paying more.

getmore4less

What do your parents plan for the money?

They may have difficulty investing it at 4% tax free so a repayment plan to them may be an option to consider.

It can be structured so they have no tax to pay.

cgray25

Thanks for the replies.

Andy - that's leading me to think I may be just as well taking the further loan with A&L at 4.89% as I get the impression that I'd struggle to get another deal as good on the initial mortgage, which I suppose would soften the blow of the slightly higher rate on the further loan.

Beecher - that's ok, still comfortably within the 75% LTV.

Get more - not sure but they want it back!

cgray25

Just wondering if anyone else had any thoughts before I have to go ahead with this!

dimbo61

If you do take out both parts of the mortgage with A&L then check if you are allowed to overpay and by how much 10% ???
Overpay on the more expensive part of the mortgage
OR ask your parents if you can pay them monthly and pay them 4.89% interest ( if they are happy to be paid over time)