Re-Mortgaging for the First time.

Daston

Hi guys

We are 5 years into our 25 mortgage. We are currently repaying the interest and capital at 5.89% (we changed to a fix rate just before the base rates dropped). We are looking to borrow a further £40k so that we can move up the housing ladder and get a good sized family home (my fience wants children after we are married). I have gone onto a number of banks/comparison sites and have worked out that the bigger mortgage extended to 30 years (we are both still young) at 3.2% (the lowest interest offered) has cheaper monthly repayments than what we are paying now.


All sounds good bigger mortgage and cheaper repayments fantastic. The down side is the total amount we need to borrow is bigger than any of the calculators tell us is financially possible (even though it saves us money). Should I be worried about this or is it one of those things where the PC cant possibly take every situation into account?

opinions4u

Re-Mortgaging for the First time.

What you describe is a plan to move house. A remortgage is staying in the same property but changing lender.

I have gone onto a number of banks/comparison sites and have worked out that the bigger mortgage extended to 30 years (we are both still young) at 3.2% (the lowest interest offered) has cheaper monthly repayments than what we are paying now.

This is all well and good. How old will you be in 30 years time? How will you afford the 3.2% rate if it has jumped to 8.2%? These payments won't be cheap forever.

What early repayment penalties apply to your current deal?

The down side is the total amount we need to borrow is bigger than any of the calculators tell us is financially possible (even though it saves us money). Should I be worried about this or is it one of those things where the PC cant possibly take every situation into account?

Yes, you should be worried. That's not to say you won't get the mortgage you want, but I suspect it will be more difficult.

Post details of:

- salaries
- significant credit commitments
- likely purchase price
- a reminder of the total mortgage you are likely to want to raise

herbiesjp

Only problem is, you will have a penalty also to consider if you leave your current deal

What are your two gross yearly salaries?
What is the purchase price?
What deposit do you have to put down?

Do you have any other loans/commitments?
Do you have a good credit history?

Let_Us_See

In a word........yes! Lenders have various affordability calculators and it seems you exceed them all. Can you provide:

Purchase price
Required Mortgage
Both gross incomes
Any other existing monthly financial commitments (loans or credit card balances not cleared monthly)

If you are honest with the above figures then we can calculate if you have an affordability option.

Unless you port your exsting mortgage I imagine you will incur a high redemption penalty? Have you considered this?