IF mortgage - re-mortgage with new provider or 'top up' from a second provider poss?

lisk

Good evening all

Current O/S mortgage with IF: £35K
Current savings with IF: £5K
Other savings: £5K
Additional amount we wish to borrow: £40K
Approximate (cautious) value of house: £160K

We're thinking of remortgaging to build an extension to our house. We currently have a mortgage with IF.com on their standard variable rate (which I think is 2.5% currently, although I'm having real trouble verifying this on their website!).

My questions are linked - is this rate good in the current market? If it is and we are unlikely to get a better one in the next 6 months, then can we leave the outstanding balance (£35K) with IF and re-mortgage the additional money required (£40K) with a second provider? Or, as its a variable rate and subject to fluctuations which could make it uncompetitive in the future, should we take the plunge and move completely to a new provider?

I seem to remember the ability to have a 'first' and 'second' charge over a property but are lenders willing to have a second charge in the current climate?

We have overpaid our mortgage by £15K and I think we could borrow this amount back from IF, but it wouldn't be enough to complete the extension.

Another factor is our income. I am employed earning £24K a year but my husband is self employed and only has 2 years accounts showing a loss in year 1 followed by break even in year 2. This year is predicted to be a modest profit. What's the likely lend rate against our income? If its 1.5 times income then we should be alright to borrow on my income alone, shouldn't we?

Any advice welcome! Thanks

Joe_Bloggs

IF do mention that you can 'still draw down your pre existing reserve while it's available on your mortgage. This may mean some more money in addition to your overpayments or not. In the final analysis it might be best to contact IF to see what they offer you. If you are going to alter the property then you should contact them to get permission , as I see it.
What they offer you, if anything, is a benchmark/starting point to find the best deal for you.
J_B. (2.5% is a good rate)

lisk

Thanks J_B. I had assumed that IF wouldn't be able to offer me anything, as they are no longer offering mortgages to new customers.
We used to have a pre-agreed reserve which would have covered the cost of the extension, but that was withdrawn last October (doh! should have thought of drawing it down at the time!). The £15k is available to us but we need more.

Joe_Bloggs

IF. Say if they can't help then they will somehow offer deals from Scottish Widows or Halifax.

J_B. (Still an IF. account holder, re-mortgaged to Nationwide four years ago)

lisk

OK, so its definitely worth having a chat with them first to see what they can offer us. Like you say, as a starting point for making comparisons with other deals.

Out of interest, are you still an IF mortgage account holder, with a top up from Nationwide, or are you completely remortgaged with Nationwide and with IF for savings only?

Thanks

Joe_Bloggs

I am now savings and current account only. I have never seen two mortgage lenders share a charge on a property on this forum. I am not saying that this never happens. You may be able to borrow the money you need, secured on your property, but it will be in excess of 2.5% perhaps nearer 7.5% or more.

Were I a suspicious lender I would want to make sure that this extra loan was not being channelled towards a struggling enterprise.
J_B.
My glass is half full unless the sign of the first derivative of the rate of the level with respect to time , at the half way point, indicates otherwise.

lisk

I did wonder if the second charge was ever common. But I'm reluctant to give up a good rate of interest if there's another way.

We drew down against our pre-existing reserve to finance the business set up costs initially, but my husband is steadily repaying that (hence the overpayment figure).

I guess a suspicious lender would be able to see the repayments to the business loan in the accounts which should help satisfy any nervousness, and could release funds at various stages of the building of extension against builders invoices if they wanted to satisfy themselves that it was not supporting the business (and lucky for us, organic veg box deliveries are picking up nicely!)

Joe_Bloggs

This does sound like a seasonal business. I could be wrong . I suspect it is one that will be clobbered by bad weather. I suppose if you are delivering something then why just restrict it to vegetables ?
J_B.

hillcats

You are caught in a sticky wicket thats for sure.
I also have an Intelligent Finance Mortgage but in fairness to them I was given ample opportunity in writing from them if I wanted to draw down on my pre-agreed reserve, this I opted not to do, as I want rid of the mortgage debt. Also it was clearly shown on-line the amount available & the date when your money was reserved until, this date came and went, and I noticed it now shows as £0.00 available, and just my over payments make up the built up reserve and the total mortgage reserve pots alone now.

Same you didn't consider this work earlier, and pulled down this money, I feel you will have no option to either re-mortgage or just keep your existing mortgage and finance the work some other way, if possible? maybe by a secured loan on the house? Good Luck though.

lisk

Yep, I thought that would be the case too and the chance to draw down the pre-existing reserve had gone. But I took JB's advice and contacted IF. Turns out they can still offer mortgages to existing customers until 31st March 2010.

So took the opportunity to apply for additional £50K and application was approved! :T

Offer available for 30 days. Once we accept the offer, we won't start repayments until we take it out of the savings account - whilst it's in there it will be offset against our existing mortgage. By choosing the 'lower payments' option (as opposed to the 'reduced debt' option we're on now) the payments are adjusted accordingly.

The sales advisor also pointed out that our mortgage small print means we're effectively on a tracker as the Terms and Conditions state it will never be more than 2% over the Bank base rate. :j No wonder IF have got out of the mortgage market with T&C's like that for existing customers.

We have just had an initial meeting with the local planners who are quite happy with the proposed extension so next step is to put in for formal planning permission.

It pays to ask - thank you!

Peter_L

lisk wrote: »

Yep, I thought that would be the case too and the chance to draw down the pre-existing reserve had gone. But I took JB's advice and contacted IF. Turns out they can still offer mortgages to existing customers until 31st March 2010.

So took the opportunity to apply for additional £50K and application was approved! :T

Offer available for 30 days. Once we accept the offer, we won't start repayments until we take it out of the savings account - whilst it's in there it will be offset against our existing mortgage. By choosing the 'lower payments' option (as opposed to the 'reduced debt' option we're on now) the payments are adjusted accordingly.

The sales advisor also pointed out that our mortgage small print means we're effectively on a tracker as the Terms and Conditions state it will never be more than 2% over the Bank base rate. :j No wonder IF have got out of the mortgage market with T&C's like that for existing customers.

We have just had an initial meeting with the local planners who are quite happy with the proposed exte nsion so next step is to put in for formal planning permission.

It pays to ask - thank you!

Lisk so you reckon that IF are still offering mortgages/re mortgages to existing customers despite telling all that they have stopped doing mortgages and are recommending Scottish Widows instead ? I was hoping to keep my IF mortgage and looking for a further £70k for renovations and this would indeed be good news as I locked into 1% above base for the remainder of the term (17 years) a couple of years ago ...