Its complicated and way over my head.... HELP! subordinate mortgage

Auntie-Dolly

I agree it sounds a good deal. If having the full amount over 11 years is making it expensive can you increase the length of both loans to make it morre affordable? We have just done this with Nationwide to keep our good base rate mortgage & borrow more.

matthorp

Are you allowed to 'borrow back' your overpayments on your existing mortgage.

What I know can be written on the proverbial postage stamp, but I'm sure I've heard of people drawing down their overpayments?

holly_hobby

matthorp wrote: »

Are you allowed to 'borrow back' your overpayments on your existing mortgage.

What I know can be written on the proverbial postage stamp, but I'm sure I've heard of people drawing down their overpayments?

Thats on a flexible "open" type mortgage arrangment - standard mortgage arrangements don't permit you to withdraw overpayments, to effectively "claw back" what you have overpaid would be termed as equity release, and would be subject to satisfaction of standard status checks.

But this was a good point to raise for the OP to consider.

Hope this helps

Holly

holly_hobby

Evilm wrote: »

Assuming that the second mortgage company would allow themselves to be a second charge and not require you to hold the whole mortgage with them (thereby loosing your original rate) then both mortgage companies can use the same "equity". All it means is that they know if they have enough coverage for both companies to get their money back if you stop paying and they have to forclose on you.

As stated previous, all mortgage lenders require first charge on the property (i.e first dibs on the property/equity on disposal).

A second charge would be sought from "personal secured loan" providers - who are happy to be 2nd charge.

All subsequent charges must be with the express agreement of the 1st charge holder (ie in this case the current lender).


Hope this helps

Holly

kingstreet

Fon wrote: »

Hi, thanks for looking.

We are selling a house for 230K

We owe 105K and have a really good rate of 1.25% (0.75 above base rate) and we can over pay when ever we like. We have 11 years left to pay at the rate we are currently overpaying by.

We are buying a new property for 270K

So we need to borrow 40K

Our current lender (Coventry) cannot change the existing deal we have with them, so wants to lend us the additional 40K on a new separate mortgage.

The new deal is capped at 3.65% and a current rate of 2.65% for the 40K. They also insist that this and the old loan will now have to be paid of in 11 years. (they say we can extend the term later if we need to reduce the payments, but we cannot have a different term on both loans)

This sounds a little expensive and I want to shop around, But how on earth can I do that..?

As, when I look for another deal on the 40k, they want to know what deposit we will be paying..?

This is the bit that really confuses me. How much equity can I take away from my 125K profit? (Ie the money I would have today if I just sold and cleared off the mortgage.)

Surely both the old and new mortgage companies are going to want some money / equity for the deposit?

Very confused if anyone can help please...?

Many thanks,

Fon

It probably simplifies things if you take a fact on board at the outset. You cannot transfer a mortgage from one property to another. Thinking you can is confusing the issue completely.

You are taking a new mortgage for a total of £145,000 on a property with a purchase price of £270,000.

You have two main options. The first is to approach a new lender for your new mortgage, establishing the rate available to you and the corresponding monthly payments. You can shop around before making a new application to ensure you are getting a competetive offer.

Option two is to take the new mortgage with your existing lender. If the product which applies to your current mortgage is portable, you may be able to transfer it to the first part of the new mortgage, with any new borrowing being taken on one of the lender's current products. You will then have a mortgage made up of two sub-accounts.

It would appear Coventry, your current lender, is prepared to port your current product and offer you a very competetive new product for the new borrowing as well.

I concur with the others. I do not believe the Coventry deal will be bettered, although the eleven year term will inflict some harsh discipline on you in return for such great rates.

Fon

Thanks very much to everyone for the replies.

Im far better educated now, and It would seem to be a very good deal,

Thanks again,

Fon