Mortgage advice

joess

Hi wondering if someone could help....

We currently have a mortgage on our home with Northern Rock which is an interest only mortgage, it's on a flexible tracker rate (which is currently at 1%) the tracker is for 25 years. The mortgage is for £84,000 our home is worth £350,000.

We are looking at purchasing another house which is in need of renovation we are going into partnership with another family member who is financing some of the renovation. This house is being purchased for £200,000 with a £90,000 renovation cost. We need to borrow £115,000.

Our joint annual salaries equal £51,000 so we know we can borrow upto 4 times our annual salary.

We have spoken to a financial advisor and they have advised that it is not possible to have 2 mortgages and that the only way we can release the £115k is to remotgage our own home, we really do not want to do this as the rate we are on at with Northern Rock is really low and to remortgage the house we'd be paying approx 2.75% on the full £199k.

We hope to have the renovated house back on the market by Xmas and as houses are still selling in this area we reckon it will be gone withing 6 to 8 months.

Any advice very much appreciated!

getmore4less

joess wrote: »

Hi wondering if someone could help....

We currently have a mortgage on our home with Northern Rock which is an interest only mortgage, it's on a flexible tracker rate (which is currently at 1%) the tracker is for 25 years. The mortgage is for £84,000 our home is worth £350,000.

We are looking at purchasing another house which is in need of renovation we are going into partnership with another family member who is financing some of the renovation. This house is being purchased for £200,000 with a £90,000 renovation cost. We need to borrow £115,000.

Our joint annual salaries equal £51,000 so we know we can borrow upto 4 times our annual salary.

We have spoken to a financial advisor and they have advised that it is not possible to have 2 mortgages and that the only way we can release the £115k is to remotgage our own home, we really do not want to do this as the rate we are on at with Northern Rock is really low and to remortgage the house we'd be paying approx 2.75% on the full £199k.

We hope to have the renovated house back on the market by Xmas and as houses are still selling in this area we reckon it will be gone withing 6 to 8 months.

Any advice very much appreciated!

Get a new one.

Where is the (£290-£115) £175k coming from?

VIGILANT22

Have you rcvd a letter recently informing you which part of NR is holding yr mortgage?.............If you're with NR asset management, you cannot apply for additional borrowing...

Radiantsoul

You can have two mortgages. It strikes me that you should be able to borrow £115k against a house worth £200k.
You might not need to remortgage your first house, but presumably could just get some additional borrowing. So you don't repay your original mortgage. Instead ask if Northern Rock would advance you the £115k at the 2.75% but keep the £84k at the old rate. If Northern Rock wouldn't do it then another lender might. They would have a second charge over your property which ought to be fine as you have a lot of equity. They may also take a charge over the investment property.

I would say that any second charge lending or even a further NR advance is likely to be a higher interest rate thatn 2.75% but as it should be for a year or so it is relatively small beer. An extra couple of percent are likely to disappear in terms of the contigencies and additional cost that tend to pop up.

VIGILANT22

2nd charge/secured loans/unregulated market/with interest rates starting at 10%!!...no no no

I somehow feel it may be misunderstood regarding the FA/2 mortgages...he was probably referring to 2 mortgages on the one property considering the discussion was around capital raising.....

getmore4less

VIGILANT22 wrote: »

2nd charge/secured loans/unregulated market/with interest rates starting at 10%!!...no no no

I somehow feel it may be misunderstood regarding the FA/2 mortgages...he was probably referring to 2 mortgages on the one property considering the discussion was around capital raising.....

True the OP may have mis reported what the FA said.

The obvious thing to do(given the NR rate) is to consider raising the money against the property being purchased asuming it is mortgageable rather than the current residence. The FA should have highlighed that option(they may have done but the OP did not mention it).

VIGILANT22

I somehow feel the OP is with NR asset management, therefore he is unable to raise capital....This will be why the FA has advised a remortage, only solution....as a secured loan is certainly not. Unregulated market arranged by tel boy ...don't think so!

joess

Hi,

Thanks for all your replies...

I'll try and answer some of the questions raised...

getmore4less: The £175k has already been raised via a family member and is in a savings account at the moment.

VIGILANT22: The FA has been fully briefed and he knows that there are 2 houses - he just said it isn't possible to have 2 mortgages (1 on each house). Also don't know which part of NR we are with - not recieved any letter.

getmore4less

VIGILANT22 wrote: »

I somehow feel the OP is with NR asset management, therefore he is unable to raise capital....This will be why the FA has advised a remortage, only solution....as a secured loan is certainly not. Unregulated market arranged by tel boy ...don't think so!

WHY? There is no reason the capital has to be raised against the cuurent properety with the NR mortgage

There is another investment house to raise the money on.
If the income supports the debt they should be able to get a mortgage

getmore4less

joess wrote: »

Hi,

Thanks for all your replies...

I'll try and answer some of the questions raised...

getmore4less: The £175k has already been raised via a family member and is in a savings account at the moment.

VIGILANT22: The FA has been fully briefed and he knows that there are 2 houses - he just said it isn't possible to have 2 mortgages (1 on each house). Also don't know which part of NR we are with - not recieved any letter.

That will be news to all the people that have them.

There may be an issue if you all want to be owners but only you be on a mortgage on the new place.

How many are involved?

VIGILANT22

joess wrote: »

Hi,

Thanks for all your replies...

I'll try and answer some of the questions raised...

getmore4less: The £175k has already been raised via a family member and is in a savings account at the moment.

VIGILANT22: The FA has been fully briefed and he knows that there are 2 houses - he just said it isn't possible to have 2 mortgages (1 on each house). Also don't know which part of NR we are with - not recieved any letter.

Rubbish....:) You could have 50 mortgages if you wanted....You wouldn't have 1 house with 2 mortgages ie NR & Abbey...

You could have a mortgage with NR 1st Charge and a secured loan (sometimes referred to as a 2nd mortgage, but it isn't a 2nd mortgage) they are not regulated by the FSA...This is a 2nd charge.....