can this be done - any IFA's??

The_White_Horse

i have a 3 yr deal - 2 yrs to go. quite a large early repayment charge.

can i get another mortgage and pay off all but a few thousand pounds of the first mortgage (that is possible - as can make any overrepayments I want). That way, i would have a new mortgage at a lower rate plus, no early redemption charge. the other mortgage would be a grand or so, so payment of that would be no issue.

can that be done?

sounds incredibly simple so I guess not.

cheers

herbiesjp

Simple answer is no

The_White_Horse

herbiesjp wrote: »

Simple answer is no

why?

is it because the new mortgagee will want their charge to take preference - even if the first one is only for a few hundre quid?

seems insanity to me.

kingstreet

herbie's right.

The current mortgage is a first charge and if any of this remains, the new mortgage can't be a first charge and that won't be acceptable to the new lender.

You could (if the maths works) raise a secured loan on a second charge basis. Use this to reduce the first mortgage, then remortgage enough to repay the remainder of the first charge and the whole of the second charge.

As you need the permission of the first charge holder to get a second charge, they might not be too impressed when you tell them you want the money to reduce their mortgage to circumvent the early repayment penalty.

holly_hobby

No, as the new lender would require 1st charge on the property - which is currently held by your existing provider, whom won't release it until your borrowings with them are WHOLLY redeemed.

Nice try though .... !!

Hope this helps

Holly

Edit - everyone else beat me to it ! But you have your answer x many !

H

herbiesjp

You will need to look at a first charge lender to get a better deal.

In order for any other charge to be put on the property teh first lender will need to agree or be repaid in full.

They will not allow you to keep a minimal balance with them and have another mortgage with someone else. It is how first charges work.

The_White_Horse

what if you can persaude the first mortgage holder to take a second charge, if they are owed a hundred quid or so? would it be possible then?

herbiesjp

No - you will not persuade the first charge lender to change. You need to repay in full if you want to leave the lender.

The_White_Horse

these people are scum bags!! ;-)

thanks for your help though. very interesting.

have you ever known a first charge lender to offer a better deal to someone on a fix? the only benefit for them would be I am a great customer (large mortgage, always paid on time), and I might leave at the end of the deal if they don't.

the trouble is, the mortgage is large, therefore the 3% (first year) and 2% subsequent years early redemption charge is quite hefty and negates the benefit of moving to most other deals (offered by that lender).

to be honest the fix isn't that bad - there is just better out there.

getmore4less

Rates have not changed much in the last year.

Why did you take this loan a year ago?

What has changed that makes your choise at that time the wrong one?

The_White_Horse

getmore4less wrote: »

Rates have not changed much in the last year.

Why did you take this loan a year ago?

What has changed that makes your choise at that time the wrong one?

at the time, there were noises that rates were about to rise. the fix is for a certain period because i want to move at the end of that period. the fix is not bad at 3.4% - but I have seen trackers on 1.99% and i think that rates will stay low for the next two years.

that is all.