2nd Mortgage ???

Japster_2

Hi,
I need to remortgage but Northern Rock have me tied in for another 21/2 years else I gotta give them £3.5k back. So I considered raising the additional cash I need by taking out a 2nd mortgage. Apart from that my current rate with them is 0.29% above base rate so I'm currently not paying a lot of interest.

It's mainly for home improvments are debt consolidation but my questions are this :-

1) Can I take out another mortgage on my house with another company ?
2) Can I take out any type of mortgage or does it have to be a special 2nd mortgage type, will I get hit on the interest rates if they know it's a 2nd mortgatge ?

I have enough equity in my property for both my existing and planned 2nd mortgage.

Any help appreciated,
Thanks,
Craig

Newbird

Japster wrote: »

It's mainly for home improvments are debt consolidation but my questions are this :-

1) Can I take out another mortgage on my house with another company ?
2) Can I take out any type of mortgage or does it have to be a special 2nd mortgage type, will I get hit on the interest rates if they know it's a 2nd mortgatge ?

I have enough equity in my property for both my existing and planned 2nd mortgage.

Any help appreciated,
Thanks,
Craig

Hi Craig/Japster, and WELCOME to the forum.

I'm sure the various mortgage and financial advisors that lurk here will be along any time now to answer your Qs in more depth, but I'll tell you what I know....

1. You will have to ask your present lender, but I'd try them first for your new loan anyway. I think it is possible to have a second charge on a property though, unlesss there is something in either first or second lenders T&Cs to prohibit this. In my experience I'd say, these days a lot of lenders are now not offering to lend at all if you have another mortgage.
But keep looking, there are those that will. You'll have to have a very good credit rating.

2. No, shouldn't be a problem, you will still be able to access all the products available as a first mortgage. A Buy to Let mortgage is a different kettle of fish however.

Your equity is one thing, your ability to pay two mortgages is what they will be more interested in.

HTH

theartfullodger

1. Yes - but NR will wanna know,.
2. talk to a broker but...
- ask NR if they will lend you extra & on what terms...

If you want further could you kindly indicate ...
a) What's your credit rating like?
b) What equity (%) do you have left in the property & how much more (£££ & %) do you want to borrow.
c) And what will the combined (existing & 2nd Mortgages) be as a multiple of your annual wages?
d) And are you employed or self-employed

Cheers!

Lodger

Japster_2

Hi thanks for the info,

My current mortgage with Northern Rock consists of my existing mortgage taken out 10 years ago and top-up secured loan taken in 2006 (which is my current deal) so NR say they can't change / remortgage add anymore unless I take out a loan with them at 11%.

So I'd rather persue other options first.

a) My credit rating is indicated as fair with a score of 867 outta 1000 received im my latest Experian report.

b) % equity left in my property is 63% and want to borrow between £25-£40k depending on if I pay my loan off too.

c) the combined total mortgages would be between 2 x joint and 2.4 x joint depending on b)

d) both employed

Newbird

Sounds like you have a chance!

theartfullodger

Yup, lucky you, should be fairly straight-forward to raise some more loot. Go for it!

Cheers!

Lodger

happybroker

You should have no problems, some 2nd charge lenders charge the most bizarre rates and some of the fees are fairly uncompetetive. These loans are not regulated in the same way that first mortgages are so many of the firms that arrange them are in the business of "selling" money so take nothing at face value, read everything through very carefully.......and then read it again!

Also really watch out for the PPI that some will try to flog you, you do NOT have to take it and it generally isn't the best value when sold with the loan (I am dealing with a client at the moment who borrowed £80k with firstplus and also took a 5 year PPI plan that cost them £24k on top of that! Quite amazing.

A good broker should be able to help you. There are some decent lenders out there.

All the best

Japster_2

great thanks,

never had ppi on anything, don't think it's worth the paper it's written on, the lenders don't like it when you refuse to take it out though :-)

Not quite sure about how to go about applying for the 2nd motgage though, do I just pick a deal I like and apply for it or will it get rejected as soon as they find out that there is already 1 mortgage on the property ?Any Help appreciated

Craig

happybroker

No, Northern Rock will have to consent to the 2nd charge being registered (and will probably make a "small" charge for doing so). The new lender, if you apply for a 2nd charge product, will know that you have a mortgage already as you would be applying for a 1st charge otherwise.

Some banks do them but not many, mortgage brokers are bombarded by 2nd charge companies all the time and most have it whittled down to one or two they know are fair.......some charge arrangement fees of 10% of the loan amount believe it or not which is why I say be careful and read and re-read the small print.

Japster_2

Ok thanks,

just unfamilier with the terminology :-)

Now where do I find a reputible mortgage broker ?

My other alternative however is to get another loan until my tie-in period is up with Northern Rock then re-mortgage for the whole lot in 2yrs 4 months time.

Are there any loan companies that lend £25k out there ? What are the early repayment fees on a loan of that size ?

happybroker

speak to family and friends re brokers to try and get a recommendation.

there are loan banks that lend £25k on an unsecured basis but the terms tend to be shorter (which makes the payments higher) and you may get a secured loan (2nd charge) with a similar or lower interest rate though the fees will probably be higher.

Get figures on both options and have a balanced look at the pro's and con's for each before taking the plunge.

Secured loans tend to have 1 months interest as an early repayment charge but again, read and re-read the small print.