2 mortgages - advice needed

Daytona_nev

Hi,

I currently have 2 mortgages with Santander for my house, came about through selling my old flat and getting an extra mortgage for the additional amount for the house I was buying.

In summary

House is worth £200k

Mortgage 1 - Flexible @ 1.25% owing approx 102k
Mortgage 2 - Variable rate @ 4.99% owing approx 52k

For mortgage 2 i pay approx double the amount of interest i do for mortgage 1 even though i owe half as much. I pay little off the balance for mortgage 2 compare to mortgage 1.

I was wondering if normally banks would allow me to replace mortgage 2 for a better deal?

Obviously both are with Santander and i was doubtful i would be able to move mortgage 2 to another provider?

Any advice would be much appreciated.

ACG

You wont be able to move mortgage 2 only to anotherprovider - you could do 1 and 2 but i imagine you wont want to do that.

You could ask santander if they have any better deals for that portion of the mortgage, but you need to counteract that against any early repayment charges you may incur. Speak to Santander they are the only people that can really help with this i think.

Although at 75% LTV i think we MIGHT start getting some new lower rate deals in the near future with this low cost money the govt are lending to banks - i doubt it will all be earmarked for 60% deals.

Daytona_nev

ACG wrote: »

You wont be able to move mortgage 2 only to anotherprovider - you could do 1 and 2 but i imagine you wont want to do that.

You could ask santander if they have any better deals for that portion of the mortgage, but you need to counteract that against any early repayment charges you may incur. Speak to Santander they are the only people that can really help with this i think.

Although at 75% LTV i think we MIGHT start getting some new lower rate deals in the near future with this low cost money the govt are lending to banks - i doubt it will all be earmarked for 60% deals.

I thought that might be the case. Given the rate for Mortgage 1 I'll be keeping that until such a time that it is no longer competitive, which hopefully will be many years away.

My other query was about how Santander might view the LTV. I own approx 24% of my property.

I'm assuming that even if moving to a new deal for Mortgage 2, they take both mortgages into account when looking at the LTV? That being the case, I might be stuck with this until i own more of the property and hit the relevant LTV threshold?

ACG

Thats correct.
Im not sure what the next threshold would be, but your just under the 75% mark, i THINK the next one may be 60% but i may be wrong - so you could be some way off that.

Speak to Santander if they have something - great. If not then it could be financially viable to move the whole mortgage to a new product.

Ive done some basic calculations and it works out your rate as a whole is about 2.5% - this probably isnt beatable as whole but if santander can offer you a better rate then it would get your rate down overall but as ive said in the nxt month or 2 i think you might see rates come down in the market as a whole - whether or not santander take part in it is to be seen but you never know what will happen.

Thrugelmir

Overpay mortgage 2 by as much as you can afford.

This will then improve your LTV. Allowing you more options to switch to in the future.