Have no idea.....£10,000 more please

nachx3

Help,
I have just taken on my first mortgage on my own (previously with husband but now divorced) I am tied in until September next year.
I wish to extend my house with my new partner and have to raise £10,000. Is it best to remortgage?
Do I have to go to original lender for the money or can I shop around?
Reluctant to put my new partner on the existing mortgage (once bitten, twice shy).

Oracus

All depends on your earnings and what you can afford as to whether you'll be lent further funds on the house in your sole name - as banks prefer to have more than one party to issue demand to if the worst happens, as the final straw of re-possession is a very costly and messy procedure for them.

If you can afford the extra repayments on your own salary then keeping the mortgage and associated loan in just your sole name should be easy.

And you will probably find it cheaper to approach your existing lender for the Equity Release Loan (ERL) as the vast majority of banks and other lenders will not take a second charge (ie. have a charge on the property after than of your existing lender) or will charge a higher interest rate for a 2nd charge ERL. Worth shopping around for a while to get quotes anyway - as I can't comment with any certainty, only know one of the major bank's secured lending products like the back of my hand!

Anyway - HTH

Os

nh

Remortgaging should be your last resort as it is a very expensive way of borrowing.

Obviously, the interest rate is low, but as you are taking the loan over 20-25 years you will end up paying about double what you borrowed.

Also, if you cannot make the repayments you could lose your house.

If you can afford a personal loan, it may be better for you to do that, even though the interest rate may be slightly higher.

Or, if your mortgage company allows overpayments, then put the £10k onto the mortgage but then overpay your mortgage by £200 (or whatever) a month for the next 50 months (or slightly more when taking into account the compound interest) and you will have paid off the original £10k and it won't cost you an extortionate amount.

See this article

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1094036763,33661,

and this thread

http://forums.moneysavingexpert.com/showthread.html?t=3709

Also, if your current deal runs till next September it may cost a lot to remortgage before then, usually there are penalties for remortgaging within the discount period.