Should I stay or should I go?

jimmy_stewart

Remortgaged to build extension and switched to current lender. Owe £30k with 6 years left of 7 year loan. Would like to remortgage (?) again to borrow another £60k or so to help daughter buy home.

Current lender is quoting me current 6.29% with extension to 18 years.

Current lender has other better fixed term deals but not for existing borrowers.

I could find better rates elsewhere but am tied in to £2k early redemption penalty. Reduces to £1k in 2009.

Questions are:

1. Do I bite the bullet and stay with current lender and take out extra loan?

2. Could I leave this as it is and just borrow the £60k from another lender i.e. is there anything to stop me having 2 loans?

3. Is it better for me to switch to say a 4.6% fixed rate for 10 years and pay the penalty?

4. When a lender says fixed rate not for existing customers is this written in stone? Know I can ask and will but just curious in general.

Any thoughts appreciated.

MortgageMamma

I think you shoudl give all your details to a whole of market mortgage advisor and take some official advice on this.

Personally, I think you might be better off switching to a long term fixed rate, but thats without doing the actually maths.

silvercar

if you are doing this to buy your daughter a home you could take out a joint mortgage on your daughter's new home. That way you could access the best rates around. Do consider the tax position of this first.

jimmy_stewart

Thanks to both for advice. Taking out joint mortgage with daughter and keeping other loan as now seems a good idea.

In a sentence what might be the tax implications of this route? Say if it was a 60% me/40% daughter split?

Thanks again

AndrewSmith

If your daughter is a first time buyer then there are lenders (Bristol & West for example) who offer a product which allows you to be jointly on the mortgage with your daughter, but will not affect your tax situation re your main residence. It is what's called a First Start mortgage.

Regarding the split, in the eyes of the mortgage company etc the split will always be 50/50 as you will both be jointly and severably liable for the debt.

Hope this helps

Andy

jimmy_stewart

Many thanks