porting mortgage and borrowing more

clairey179

Hi, looking for some advice please!
Just accepted an offer on my property, and have put in a (quite low) offer on the house i want to buy. At the moment, I have the savings to make up the 10k shortfall between what we'll get sell, but if we need to pay say 5k more, i won't have enough money. My mortgage lender is happy to port over my current mortgage deal to the new house (pending valuation etc, which will be well within criteria), and said we can borrow more using a new product. But i only need max 7k, and I could easily repay this within 7 months, so taking out a 2nd mortgage product seems a bit daft?
Can I just take out a personal loan and use that instead? When i took out my current mortgage product, the fee was only £99 - I'd be quite happy to pay that again, but their fees are all now around £995 - which seems extortionate for such a small amount for such a short time.....
Any suggestions/advice?
N.B - i had planned to save more, but my house sold in 3 weeks at the full asking price, so with the current market, obviously accepted the offer - was expecting to have another 6 months to save!
Thanks in advance to anyone who can give any suggestions

dimbo61

It will take 3/4 months to sell and buy the next property so start saving and consider 0% credit cards if ( and only IF ) you can pay back quickly.
check all the deals being offered by your existing lender as no point paying £995 fee if at all possible

clairey179

Thanks for your reply. We're looking to move within 6 weeks (possible with the house am looking to buy, and asked for by our buyer), so there's only 1 more months wages inbetween, so max will have saved is 11k.
How would I go about using credit cards to pay the remainder? I can repay 1k a month, so can repay the remainder quite quickly. Would the solicitors accept this as payment to pass on to the buyers?
Have checked our mortgage provider, and they have a 'special offer' with no fees for fixed rate mortgages (has changed since i checked at the start of the week!).
So would I be better just to take out another say 6k on their 3.95% fixed rate for 2 years?

Am also quite confused about having 2 mortgages? would i need to borrow the 6k over 25 years like the rest of the mortgage?

Advice much appreciated!

kingstreet

You aren't taking out two mortgages. You'll have one new mortgage for the amount you need to borrow. Some of that mortgage will become account number 1 and will have the current amount/rate/term ported to it. Account number 2 will have the extra borrowing, based on a new product you take now. Choose something with no fees and no penalties for early repayment if you can.

The term of the new mortgage will apply to both sub-accounts, but you can overpay to reduce the term when convenient to you.

clairey179

Again, many thanks for the advice. So it might just be as well to take out more money with current bank then?

We wouldn't be planning to overpay much in the first year as there's a fair amount of work to do to the property (kitchen, bathroom, carpets etc), but we can make 10% overpayments of the total amount owing during the fixed rate period (2.5 years remaining), so next year we'd be looking to overpay the 8-9k per year, and save the rest to pay as a lump sum when the fixed rate is over, if that makes sense?

I've only had info verbally from the bank that we're fine to borrow more, do I need to get this in writing from them? It would bring our total borrowing to 94k, joint annual income c£60k, so I'd hope that this would all go through ok? Borrowing £94k would make a ltv of 75%, so should hopefully still be able to secure a good rate for the extra? Only other debt is £1k with 8 months left on a 0% balance transfer that we used for a holiday.

All advice given so far has been excellent, many thanks, it's much appreciated!

dimbo61

If you are happy with your current deal and can borrow the extra £6K from the same lender at 3.95% fixed for 2 years why not have it over the 2 years if you can afford the extra payments each month! and keep the existing term for the rest of the mortgage

kingstreet

clairey179 wrote: »

Again, many thanks for the advice. So it might just be as well to take out more money with current bank then?

We wouldn't be planning to overpay much in the first year as there's a fair amount of work to do to the property (kitchen, bathroom, carpets etc), but we can make 10% overpayments of the total amount owing during the fixed rate period (2.5 years remaining), so next year we'd be looking to overpay the 8-9k per year, and save the rest to pay as a lump sum when the fixed rate is over, if that makes sense?

I've only had info verbally from the bank that we're fine to borrow more, do I need to get this in writing from them? It would bring our total borrowing to 94k, joint annual income c£60k, so I'd hope that this would all go through ok? Borrowing £94k would make a ltv of 75%, so should hopefully still be able to secure a good rate for the extra? Only other debt is £1k with 8 months left on a 0% balance transfer that we used for a holiday.

All advice given so far has been excellent, many thanks, it's much appreciated!

This does make sense.

You could get an agreement in principle for the full amount you might need to borrow, or simply wait until you agree the price for the new property then make a full application.

clairey179

Thank you all very much. Am going to get an agreement in principle from my current provider for the maximum i might need. My plan will then be to overpay immediately over the next 8 months to get rid of the amount I've just borrowed. Physchologically it'd feel good to not increase the mortgage any, but this way I'll be able to do the place up more quickly and not even touch the emergency savings pot.
Decision made - thank you!!

kingstreet

clairey179 wrote: »

Thank you all very much. Am going to get an agreement in principle from my current provider for the maximum i might need. My plan will then be to overpay immediately over the next 8 months to get rid of the amount I've just borrowed. Physchologically it'd feel good to not increase the mortgage any, but this way I'll be able to do the place up more quickly and not even touch the emergency savings pot.
Decision made - thank you!!

Subject to you getting a penalty-free product, of course. Otherwise, use whatever mechanism there is for overpaying without penalty and saving the rest until later.

dimbo61

Hence the idea of only having a 2 year term for the extra borrowing ( but only if you can really afford the higher mortgage payment!!!)

kingstreet

dimbo61 wrote: »

Hence the idea of only having a 2 year term for the extra borrowing ( but only if you can really afford the higher mortgage payment!!!)

AFAIk a mortgage can only have one term. The products may have different end dates within a sub-account, but the mortgage term covers all.

If there are any lenders who allow sub-accounts to have different terms, I'll stand corrected.