Can't raise further borrowing on mortage because not "live" anymore

stella1w

I have had a CAT tracker mortgage since 1999 and raised a small home improvement loan on it in 2004 with no problems. The interest rate is one per cent above base so I am very happy with that! There is tons of equity in the house and I would like a further home improvement loan (small amount). But I have been told that because the product was taken off the market in 2005, no further borrowing can be done against the house, and that I can't even get a secured loan against the house unless I repackage and remortgage my entire borrowing ie. the outstanding mortgage. When I asked why I was told this is policy but no further reasons given. This doesn't seem fair and I feel like I am being forced into a higher interest rate. Can they do this?

DannyboyMidlands

What's unfair about it?

If you don't like the terms on offer then you can always borrow the money somewhere else.

maninthestreet

In 2004, did you have to re-mortgage in order to get this 'small home improvement loan' ?

stella1w

I don't think so. I called the bank with whom I have the mortgage, they agreed a home improvement loan, on the same terms as the rest of the mortgage eg. term and interest rate and the money goes out at the same time as the mortgage but separately. It's not down as a second charge on the mortgage.
I could understand if they didn't want to offer me the same great rate for additional borrowing, but can't understand why they won't offer a second mortgage or secured loan?

kingstreet

CAT-marking forced lenders into very narrow parameters in respect of the terms they had to offer. These products never really took off and I'm not surprised you can't get additional borrowing nowadays.

I'd look at the cost of a thirst-party secured loan for the amount you need, then compare that with the cost of remortgaging the whole amount you need to a new lender. See which offers the best value.

Otherwise you'll have to raise the money in a different way altogether.

stella1w

To update - the bank, HSBC called today to apologise and say I could raise additional borrowing on my CAT tracker but obviously pay a new rate on this borrowing which is all I wanted to do. Previously they were saying I had to repackage all the borrowing and lost the great rate on my original borrowing.