Mortgage extension questions - Running 2 mortgages on the same property

Big_Zee

Hi,

I currently have a mortgage running on my property where the discounted rate finishes in Jan 2013.

I called up looking for a mortgage extension (the COOP) to build an extension. They said this was possible and essentially it would be another "mortgage" which I could pick from their current offerings - that would be for the additional loan and run alongside my current mortgage.

The issue (especially as the minimum mortgage term is 2 years) - will result in me having effectievly 2 mortgages on one property where the lock in period ends at different times - eg one Jan 2013 and the other for the extension in Jan 2014.

What I would like to know is if when the main part of my mortage lockin period ends in 2013, would it be possible shop around and maybe this part of the mortgage to another provider, while still having the other smaller part at the COOP?

If this is not possible, it seems I would only be left with the possibility of either

A/. Waiting till the 2014 and have to pay the higher SVR on the bulk of the mortgage from 2013 - 2014.

B/. Pay the early redemption fee on the smaller part of the mortgage in 2013 so I can move the lot away.

Either way this is seemingly going to cost me - so I was wondering if it is was possible to just move part of the mortgage away while still having the smaller part at the COOP.

Thanks for any advise that may help.

holly_hobby

No, Co Op are essentially giving you a further advance - which is essentially an add on to your current borrowings in a seperate pot in you like (with a sep mortgage product).

The important thing is that all mge lenders require first charge, which Co Op currently hold, and why they are in agreeance to the further advance - you won't get the FA without they holding the main mge.

You could of course choose to remortgage completely away from Co Op, with new borrowings that include the equity release you require for your home imps. As a new mortgage with the new lender, it would be one single account, on one single product, chosen from their available portfolio at the time of application.

Hope this helps

Holly

Big_Zee

holly_hobby wrote: »

No, Co Op are essentially giving you a further advance - which is essentially an add on to your current borrowings in a seperate pot in you like (with a sep mortgage product).

The important thing is that all mge lenders require first charge, which Co Op currently hold, and why they are in agreeance to the further advance - you won't get the FA without they holding the main mge.

You could of course choose to remortgage completely away from Co Op, with new borrowings that include the equity release you require for your home imps. As a new mortgage with the new lender, it would be one single account, on one single product, chosen from their available portfolio at the time of application.

Hope this helps

Holly

Umm - I thought that would be the case. To re-mortgage the whole lot now I'd also have to pay an early exit fee. looks like I really don't have much option other than to admit i will have to pay an early exit fee one way or the other.

JimmyTheWig

As Holly says, you can't move one part of your mortgage, just as you can't take the additional borrowing with a different lender.

Your choices are
1. Remortgage now (either with Co-op or elsewhere) for the full amount, paying the redemption fees on your current product.
2. Wait until January and remortgage (either with Co-op or elsewhere) for the full amount paying no redemption fees.
3. Take the further advance now and remortgage (either with Co-op or elsewhere) the whole lot in January, paying the redemption fees on the further advance.
4. Take the further advance now and switch products with Co-op on the original loan in January (hopefully with a deal that will allow you to tie-up the two at some point).
5. Take the further advance now and pay SVR from January until you can remortgage (either with Co-op or elsewhere) with no redemption penalties.

Without knowing the figures and your timescales I would say that option 2 was the best value. That's only two months time. It will take some of that time to get a new mortgage agreed, anyway.
If you can't wait that long then the best answer will depend on what the two loan amounts are, how they are being repaid, what rates you will be paying on them, what the redemption charges are for them, etc.

Thrugelmir

Big_Zee wrote: »

Umm - I thought that would be the case. To re-mortgage the whole lot now I'd also have to pay an early exit fee. looks like I really don't have much option other than to admit i will have to pay an early exit fee one way or the other.

Why do you need all the funds now?

Build won't be finished by January.

Not a good time of year to start external works either.