Northern Rock Borrow Back thoughts please

neffie

Hi all, in the process of buying sister's half of inherited property worth 300k and my broker is recommending the NR mortgage as I will also have sum lump savings to offset (by paying into mortgage and borrowing back at a later date). My main query is that my broker is recommending borrowing the full 65% of properties value, effectively securing 45k as a future low rate loan to invest in a buy to let along with overpayed lump sums. What are the advantages / pitfalls of this scenario as I have some reservations about borrowing more than I need to - but on paper it does make sense. My other concern is that they seem to be getting tough on those who ask for any overpayments back, so any comments on this welcome...
Thanks in advance :huh:

maninthestreet

Borrowing = Debt - what borrow more than you have to?

neffie

The idea being to pay back the extra 45k immediately - reducing the amount interest is payable to 150k which is what we would borrow otherwise. This is then available to borrow back at the same rate of 4.69%, to use as a deposit on a buy to let enabling us to get the smaller outstanding amount on a B2L mortgage which will probably be a much higher rate... so it's there if need be.

neffie

Does this sound like good advice or are there any pitfalls to be wary of?
Thanks in advance

Benh

I'm looking at taking a mortgage with NR, since there aren't enough offset deals at the moment. FD which I bank with for over 10 years would not take into account any dividends as income, not even for a 60% mortgage. NR seems to be flexible, but I want to know my full rights in regards to the Borrow Back. The risk is still whether the Borrow Back will be approved, and what is the criteria? from Northen Rock:
"If you make overpayments which total at least £500, then subject to Northern Rock's prior agreement, you may be able to borrow back some, or all, of the amount overpaid."
I suspect that the NR would not release money for all kinds of other investments.