Extra borrowing on our Mortgage

ferry

Hi all
Looking for some advice on possibly remortgaging to release some funds for home improvements.

We are currently in a fixed-term deal with the Coventry BS which does not end until July next year.
We would like to approach them now to see if there is any extra borrowing power available to us.Probably a silly question,but would we have to completely remortgage again for the whole lot including the extra and in view of the fact we're in a fixed term deal will there be any penalties(redemption?) to pay of we remortgage with them?

Also would anyone have any idea what the lending criteria is for the Coventry and what the proceedure is in requesting these extra funds.Would it be best going through the original broker who got the deal for us or is it something we could persue ourselves?

Thanks a lot for any advice

TangentMan

I don't know of the Coventry's policy, i am afraid.

However additional borrowing (aka further borrowing) is a pretty standard thing for Banks and BSs to offer. Lets be honest you want to owe them more money - they are normally happy to oblige. There should be no need for a remortgage (unless your T&Cs or circumstance mean it has to happen - some mortgage types have additional features that can mean you have to remortgage).

They will assess you against their lending policy (income / loan to value for the new amount) but nothing you wouldn't expect them to do.

If you are happy with the Coventry then you may as well just give them a call or pop into a branch and ask about additional borrowing. Take along your most recent mortgage statement (or at least your account number!) and i suspect they will be able to give you an indication of amount and cost and so on there and then.

silvercar

I seem to be on first name terms with most of the people at the Coventry call centre at the moment! I have found them very helpful and knowledgable. 08457 665522.

If you take extra money then your existing mortgage continues on the current deal. The extra money is at any of the deals currently available to new borrowers (check the website under mortgages ---> rates). If you want to borrow less than £5k more you can get it on your current deal.

Their lending criteria is based on the total loan to value of the property (85% to 95% depending on the mortgage chosen) and your current salary. The salary multiples go up in stages based on your joint salary with the multiple based on the highest salary. If I remember salaries over 35k can get 4.3 x joint income. I can look up their table if you need.

If you don't satisfy the criteria, they do something called MOREmortages which is like a secured loan added to the mortgage.

Ian_W

Your current deal with the Coventry is obviously fixed/discounted to a specific date in the future and there are penalties for early redemption. One thing to try and avoid, even if it means paying a bit more interest on your further borrowing, is having that fixed to a different date beyond the original one.
That puts you in a situation where, when your main deal finishes, you'll be unable to remortgage to any other lender without penalties on your additional borrowing. So better to keep the flexibility to remortgage all your borrowing elsewhere.

ferry

Thanks for the advice guys.
I was hoping to borrow another 10K,but could I just clarify that you're suggesting I take this further borrwing out only until my main mortgage fixed deal ends next July?.If so then surely this is likely to cost a fortune in extra monthly payments...apologies if I have misunderstood.
Also would I need to use a broker for this or is it best we just approach our lenders ourselves?

Thanks again for te ongoing advice.

silvercar

I think Ian W means that you should take the extra out on a deal without tie-ins (redemption penalties), so that when your fixed rate deal ends you are free to remortgage the whole lot as one bundle.

For example the Coventry have a variable rate with no tie-ins at 4.85% interest. If you took that out for the extra 10k, when your main mortgage deal finishes in 2007 you have the choice what to do with the whole bundle. If you took the extra on a fixed rate that had tie-ins until say 2010 you would be tied to the same provider until 2010. With your main mortgage amount only fixed until 2007 that would give you a problem if they had no fixed deals you wanted to go for without changing provider.
Taking the 10k on a deal without redemption penalties leaves you free to look around again when your current fixed deal ends.

As you only want to borrow an extra 10k there is a good chance that the coventry won't ask to redo the valuation (unless you have a very high loan to value ratio at the moment). So its almost bound to be cheaper to stick with them.

I would phone them up and ask, will only cost you the price of a local call!

Ian_W

silvercar's got what I intended to mean spot on. It's possible to tie yourself to the same lender for longer than you intended if your extra borrowing also has penalties for early redemption and a different end date.
In 2007 you want to be able to move if someone else has better deals on offer than the Coventry.

ferry

Excellent.Many thanks for spelling it out for me.

I appreciate your help