Mortgage further advance when near end of deal

jonnyb1978

Currently on a 3 year tracker from the Cheshire Building Society which is due to end at the end of February.
Had a good deal from this as the mortgage is only 0.34% above the BOE Base rate.

Have been assuming we will automatically go onto their standard rate of 3.99% so have been looking for some competive deals to pay of the remaining £55000 we owe plus a further £5000 on top for home improvments etc.

However looking into the mortgage another good thing to come out of it is that we will go onto their SVR which is currently 2.5% (+2% BOE)
So looking for a remortgage seems a bit silly at the moment and am wondering about a further advance on the current mortgage but not sure how these work.

Is it considered a second loan/ mortgage.

Even with the extra charged at 5% and paying £55000 at 2.5% it will save around £25 a month than the whole lot at 3.5%.

Am i on the right lines here. Anyone offer any advice!

slummymummyof3

Perhaps you should think about longer term security - what if rates go up? HSBC have 5 year fixed rates @ 3.94% for £99 fee. We recently remortgaged to them and in addition to our mortgage, had £10k for home improvements which although dealt with as a seperate home improvement loan (something to do with if you claimed for interest payment help from the Government in the event of redundancy, you wouldn't get it on that section of the loan as it is not part of the mortgage) is at the same rate as the rest of the mortgage.

jonnyb1978

Thanks for the input.
As it a low mortgage there is not much in the monthly payments for a few precent. The figures i have just been given is 5.59% fixed for 2 years for the extra £5000, and come march we will be paying 2.5% for the £53000 (approx). Based over 17 years it works out at £360 a month. Fixing the whole £58000 at say 3.79% over 17 years is £390.
Again £30 a month more with the added security, and with any valuation, legal fees to remortgage, whereas staying with my current provider will not have any more legal fees etc etc unless i choose to change if interest rates do start going up.

Interest rates would need to rise to around 1.75 before i was paying the same as the fixed and any sign of movment i could always then look at fixing. In the mean time possibly overpaying the 2.5% portion by £30 as if i was on the fixed rate. Not a lot of overpayment but every little helps..

Any thoughts please.

edit: just a thought if i remained on the SVR for the £53000 and fixed for the £5000. Could i still go elsewhere? Would there be normal ERC on the £5000??

HappyMJ

What do you want the £5,000 for? A car? You will be paying it over 17 years. I woudn't do it. That amount of money you should be able to get a cheap credit card or personal loan and pay it over 5 years.

TrickyDicky101

Mortgage providers usually have minimum limits on what they will advance for a mortgage (I seem to remember that Nationwide is around £25k) so you may not have the option of remaining with your current lender and obtaining a further mortgage elsewhere (if you only want an extra £5k). The fees involved would likely make it completely uneconomic even if you were to get an additional mortgage elsewhere.

So I would ask your current lender if they will advance you any more money and what the terms would be. They will be no doubt desperate to get you off of your current deal so watch the terms carefully.

If you have sufficient (unused) monthly disposable income you could consider a personal loan - although the rates will be much higher (eg around 7% for the best0 if you can pay it off in say 5 years then you will only be paying that rate for a shorter time and hence will pay less interest overall.