To Remortgage or Not???

Nikon_Les

Hi all, first post here so please be gentle!

I'm currently considering a remortgage but would like to hear some thoughts on my reasons for this.

I'm currently on a very good mortgage deal, 1.25% which I currently overpay by £50 per month. I know this is a good position to be in and that's part of the reason I would like to hear some thoughts.

I wouldn't say we were 'struggling' each month but I think this remortgage will free up some cash on a monthly basis to allow us to 'live' a bit more.

The plan (if I go through with it) is to remortgage with a bit of extra cash included. The extra cash would be used to carry out some home improvements and to pay off an unsecured loan which still has 3.5 years to run.

Now i'm fully aware of the downsides to taking this course of action; I'll end up paying a bit more and it'll take longer to clear my mortgage. But on the plus-side I'll have around £150 extra per month to have fun with my young family.

Thoughts?

kingstreet

Why on Earth are you overpaying a mortgage at 1.25% when you have more expensive credit you could be repaying faster?

Have you investigated overpaying the loan instead?

You're going to more than double your mortgage rate in the course of re-scheduling short-term debt over a longer period to generate an imagined saving.

Why not ask your existing lender for a further advance to replace the short-term loan and fund your improvements and keep your existing mortgage as it is? You can then look to pay this back quicker than the mortgage term it will be initially repayable over...

Thrugelmir

Are you in a position to remortgage if you are struggling to live in a comfortable manner such a low rate of interest?

What's changed since you first took the mortgage on?

Nikon_Les

Thrugelmir wrote: »

What's changed since you first took the mortgage on?

2 kids!!!

But seriously, I don't think i'd have any problems with a remortgage. As I said, it's not as if we are struggling each month, it would just be nice to have a bit more money each month to do some fun stuff with.

Nikon_Les

kingstreet wrote: »

Why on Earth are you overpaying a mortgage at 1.25% when you have more expensive credit you could be repaying faster?

Have you investigated overpaying the loan instead?

You're going to more than double your mortgage rate in the course of re-scheduling short-term debt over a longer period to generate an imagined saving.

Why not ask your existing lender for a further advance to replace the short-term loan and fund your improvements and keep your existing mortgage as it is? You can then look to pay this back quicker than the mortgage term it will be initially repayable over...

Thanks for your reply Kingstreet.

That's a good point about overpaying the loan instead, I'm going to look into that.

I'm sorry but I'm not really sure what you mean in your last paragraph. Do you mean a further advance on the mortgage? I can't see my current lender doing that as they seem to be doing everything they can to get me off my current mortgage deal! (that's not why i'm considering this though!)

Thrugelmir

Nikon_Les wrote: »

it would just be nice to have a bit more money each month to do some fun stuff with.

Personally I would suggest to leave the mortgage alone. Look at ways to increase household income or cut outgoings.

Remortgaging may give a short term boost. Longer term there might be even less to do fun stuff with.

kingstreet

Nikon_Les wrote: »

Thanks for your reply Kingstreet.

That's a good point about overpaying the loan instead, I'm going to look into that.

I'm sorry but I'm not really sure what you mean in your last paragraph. Do you mean a further advance on the mortgage? I can't see my current lender doing that as they seem to be doing everything they can to get me off my current mortgage deal! (that's not why i'm considering this though!)

Further borrowing or a further advance is indeed more money from your existing lender. It won;t be at 1.25% though. They will probably offer it on one of their other products. They may wish you weren't paying that 1.25%, but there's little they can do to force you off it. Remortgaging is doing exactly what they want. At least investigate the possibility and see what it will cost.

Have you actually costed a new mortgage with a new lender for the amount you want to borrow? Until you have all the numbers to make a realistic comparison, keep an open mind.

Nikon_Les

kingstreet wrote: »

Further borrowing or a further advance is indeed more money from your existing lender. It won;t be at 1.25% though. They will probably offer it on one of their other products. They may wish you weren't paying that 1.25%, but there's little they can do to force you off it. Remortgaging is doing exactly what they want. At least investigate the possibility and see what it will cost.

Have you actually costed a new mortgage with a new lender for the amount you want to borrow? Until you have all the numbers to make a realistic comparison, keep an open mind.

Thanks for that explanation.

I've carried out some quick calculations but agree that I need to get an actual quote for a new mortgage. I've by no means settled on this course of action and the point that Thrugelmir makes about a short term boost but leading to longer term problems is a good one.

Thanks for the replies so far.