Where to get the additional funds from

delmar39

Hi there

We're currently in the process of selling our property and have put a deposit on a new build.

To cut a long story short we have a shortfall of around £20-30k taking into account current mortgage and equity in our property.

I've met with our current mortgage provider and we're tied in for another 2 years on a fixed rate deal at 4.69%. So, £2k charges if we pay it off early.

They say we can transfer existing mortgage to new house and then set up a new mortgage account for the additional £20-30k. Rates aren't great and there's a reservation charge of £500.

It seems daft creating a new mortage account for such a small amount of money.

Does anyone have any ideas about the best way to get the additional funds together? Do I have to go through current mortgage provider?

I don't want to have two mortgage accounts, but if that's the only way then so be it.

Thoughts welcome.

Let_Us_See

Porting and then topping up is quite normal, and unless you only have a small redemption penalty, it is probably the most competitive method of proceeding.

delmar39

Let_Us_See wrote: »

Porting and then topping up is quite normal, and unless you only have a small redemption penalty, it is probably the most competitive method of proceeding.

So does that mean transferring existing mortgage and then taking out a new mortgage account for additional funds? Can I go to any provider for addtional?

_Andy_

If you go to another provider you'd then be looking at a 2nd charge secured loan thus much higher rates/not worth doing.

delmar39

Excellent, thanks. As soon as we've confirmed the offer on our place, I can book to see current provider and get the ball rolling. I guess because we already have a mortgage with them the process for securing additional funds should be straight forward.

MrsMoo2U

delmar39 wrote: »

Excellent, thanks. As soon as we've confirmed the offer on our place, I can book to see current provider and get the ball rolling. I guess because we already have a mortgage with them the process for securing additional funds should be straight forward.

I was recently in a similar position. I approached my current lender A&L who told me that because I was within 4 months of the end of the tie I could take out a new product and would not have to pay the redemption fee. I suspect if you are within certain limits your current lender could do the same thing. A word of warning though, new properties are currently being heavily targeted by mortgage lenders with regards to the amount of ltv they will give you. I had to put 30 % down on a new flat (which the surveyors then down valued and the lender reduced my offer thus meaning I effectively have had to put down 35% deposit) check out which lenders have the best offers for new properties. Staying with my old lender saved my redemption fee but left me having to find a bigger deposit!

delmar39

cherisong wrote: »

I was recently in a similar position. I approached my current lender A&L who told me that because I was within 4 months of the end of the tie I could take out a new product and would not have to pay the redemption fee. I suspect if you are within certain limits your current lender could do the same thing. A word of warning though, new properties are currently being heavily targeted by mortgage lenders with regards to the amount of ltv they will give you. I had to put 30 % down on a new flat (which the surveyors then down valued and the lender reduced my offer thus meaning I effectively have had to put down 35% deposit) check out which lenders have the best offers for new properties. Staying with my old lender saved my redemption fee but left me having to find a bigger deposit!

Thanks for this. We'll be looking at a 30-35% deposit so this is good to know. When I met with current provider they didn't seem to think there would be a problem, but this was before we had our first offer on the house. Watch this space.

Conrad

Many people have 2 or 3 different mortgage products with one provider - I do myself. You obviously cannot increase your current deal as the funds for that would have been arranged years ago based upon the money markets at that time.

Your situation is absolutely normal and nothing to worry about. Have 2 accounts, unless that is you are better off paying the penalty and taking a new deal for the entire sum.

All the best

dimbo61

please check out mSE latest news re fixed rate deals
You might be better off getting a new mortgage for the whole amount rather than stay with your existing lender or use this in talks with existing lender
IE 2 year fix at 3.69% !

Thrugelmir

dimbo61 wrote: »

please check out mSE latest news re fixed rate deals
You might be better off getting a new mortgage for the whole amount rather than stay with your existing lender or use this in talks with existing lender
IE 2 year fix at 3.69% !

You are overlooking £2k of ERC's plus product fees in changing mortgage provider. So not necessarily as good as it initially appears.

theartfullodger

Where to get the additional funds from

A bit radical perhaps, but have you thought of...
a) Spending less, thus saving some £|££
b) Getting another, 2nd, job/working overtime etc??
c) Other ways of raising money ?? Flogging stuff off, renting-a-room ?????

Cheers!

Lodger