Do i get the Woolwich Mortgage reserve account automatically

Cheesedoodles

Hello,

We have a mortgage offer with Woolwich and we are due to exchange contracts next week (as long as all goes to plan).

I'm on fixed rate 2 year deal for 3.89% and our LTV is 60%. I've heard that there is something called a Mortgage Reserve which is a secured overdraft against the value of your house (up to £20000).

You see, my parents-in-law have paid the deposit on the house (quite a large one) and we do need some new furniture, a bit of DIY etc. It would be great to use the mortgage reserve for this since it will be significantly lower than credit cards or loan.

Would I get this Reserve Account automatically or do I need to apply for it? I've already received a Mortgage current account card....Even though we have not completed yet.

LeeSouthEast

Rather than effectively increase the LTV, save up for these things. Then you won't pay any rate.

(Yes.... I know this wasn't the answer to your question).

blueberrypie

Cheesedoodles wrote: »

Hello,

We have a mortgage offer with Woolwich and we are due to exchange contracts next week (as long as all goes to plan).

I'm on fixed rate 2 year deal for 3.89% and our LTV is 60%. I've heard that there is something called a Mortgage Reserve which is a secured overdraft against the value of your house (up to £20000).

You see, my parents-in-law have paid the deposit on the house (quite a large one) and we do need some new furniture, a bit of DIY etc. It would be great to use the mortgage reserve for this since it will be significantly lower than credit cards or loan.

Would I get this Reserve Account automatically or do I need to apply for it? I've already received a Mortgage current account card....Even though we have not completed yet.

I don't believe the Mortgage Reserve is automatic - I think it has to be applied for at the same time as the mortgage - however, given that you've received a card for a Mortgage Current Account, it looks like you've got that Reserve.

However - the interest rate on the Mortgage Reserve is *not* the interest rate on your mortgage - it is Woolwich's SVR.

That might still be a cheaper way for you to borrow money, but if you're already in the position of having very little in the way of savings, getting into more debt is probably not a good idea.

Cheesedoodles

LeeSouthEast wrote: »

Rather than effectively increase the LTV, save up for these things. Then you won't pay any rate.

So we have to sleep on the floor then? Not sure that's how I anticipated our first house to be like!

We need a few essentials so it has to come from either credit card or a loan. But then I heard about the mortgage reserve, which is why I asked

We're only looking for around £4-5k which we both can pay back in a year or so...

LeeSouthEast wrote: »

(Yes.... I know this wasn't the answer to your question).

No, you're right. That wasn't my question

EDIT: I just saw blueberrypie's response. Thanks for your respone. I know it's not good to get into more debt, but these are a few items we need. My parents in-law paid the deposit so that we could get a good interest rate. And now, we're "on our own". So we're paying very little for the mortgage. I also know the Woolwich Variable Rate is higher than my mortgage, but still a lot cheaper than my 12% credit card, or a 10% loan (nor sure what rates on personal loans are nowadays).

Cheesedoodles

I just dug out the Key Facts sheet I got just after I applied to the mortgage. It says "A Mortgage Current Account Reserve facility is available. The amount of the reserve in this illustration is £0".

I suppose they wouldn't put any amount in the illustration since at that point I hadn't even had the survey done.

I guess I'll find out when my purchase completes. I don't want to phone Woolwich to ask any questions at this stage since my solicitor now has the mortgage offer and everything is set for the exchange....

Patience is virtue and all that

blueberrypie

I'm fairly certain that my KFI had details of my mortgage reserve, including the reserve limit. Maybe it's standard that you get the account but not the overdraft part.

Ignore me if you want, but I promise you, this is good advice: this is not the time to go spending thousands on anything, however essential you feel it might be. Get on your local Freecycle/Freegle group for things like furniture, kitchen utensils, etc. Ask friends and family if they have bedding etc that they don't need. Okay, so it might not be the sofa you want or the curtains you'd prefer. But it will be free, and it will save you from getting into debt, and in a few months you'll have saved enough money to start replacing things one at a time. It might not be how you anticipated living in your new home - but it's only short-term. If you get into debt and then something happens (job loss, car dies, whatever) - then what? I'm betting you also didn't imagine worrying on your way home about the credit-card bill that you expect to find on your new doormat, or standing inside your new front door looking at the envelope from the electricity supplier and not wanting to open it because you know you can't pay it - but it's very easy to find yourself in a situation like that, and very difficult to get yourself out of. I've BTDT, and I promise, being able to pay every bill without worrying is far, far more valuable than having the house just the way you wanted it.

jamesperrett

I have a Woolwich mortgage and received a card in the post before completion. However, I didn't ask for a reserve and, as I understand it, if I wanted to use the card I would incur a fairly hefty charge to set up the mortgage reserve.

Cheers

James.

foreversummer

You automatically get a Barclays current account complete with card, but you do not automatically get a Mortgage Reserve account. This has to be applied for at the same time as you apply for your mortgage. If you ask them for one now, before completion, you will have to apply again and they will have to issue another mortgage offer.

If you apply once you have completed, you will have to pay a fee, which I can't off the top of my head remember how much it is, but it does run into the hundreds.

This info was correct as of August 2008 unless anything has changed since.

Foreversummer

Cheesedoodles

Hmm... On the the Mortgage Charge page it says the charge for increasing the mortgage reserve is £150 I. assume that is the same fee as if I was to apply for it afterwards!!

I can't remember my mortgage advisore mention this to me!! (I went into the barclays branch). Oh well, to late now, we're due to exchange next week so I wont ask about the reserve now. I might just have to cough up the fee.

Most debt is bad, I agree, but in moderation and used properly it is a helpful tool. Unfortunately, the world economy is dependend on people borrowing money...

This is my view, and I know it's not the view of 99% of the people on this forum..But please don't flame me. I retain the right to express my views
A mortgage is also debt...I'm surprised I've not been advised not to buy a house until I've saved up enough?!