Loan Vs Remortgage of property

Denver235

can anyone offer any advice on the following situation.

We have a mortgage on our current house which we are trying to sell. We have a buyer for it but they are trying to sell there property so for the time being we are at a bit of a stand still. We don't want to miss out on the property/ land we want to buy so we are going ahead with the purchase. We can borrow enough to get another mortgage BUT the property we want has been deemed un mortgageable by the lender - this doesn't concern us as we only really want it for the land.
Just to put you in the picture the house we want is less money than the one we live in so once we sell our current home we would be mortgage free. We intent to live in the exsisting house whilst we build our 'dream house' on the land and then knock the original one down.

We are currently only on an interest only mortgage and have been paying a chunk off the capital each year. We aren't in a fixed period. We basically need £26,500 more money to buy this house/ plot so we want to know if we would be better getting a loan or remortgaging?

If we get a loan we are thinking of getting it over 10 years but paying it off as soon as our house sells - obviously there are some redemption fees but think this is only 2 months interest?? In this instance we would also be able to take a payment break on our urgent mortgage of up to 6 months - and hopefully by this point our house will be sold. If it's not sold then we'll be no worse off as the combined mortgage and loan amount won't be much different the the amount we'd be paying if we remortgage.

If we re-mortgage we'll be fixed in and will have higher repayments and the early repayment charges will be more also.

Anyone got any thoughts or opinions on which way to go???

Many thanks

happycamel_2

Presumably you are talking about an unsecured loan? If so that's a big risk for a lender and likely to come with a sting in the tail in terms of ts and cs. Have you actually been offered an unsecured loan that big? Not many people have enough income to get one.

If you mean a secured loan then that would need to be secured on your current property and redeemed at the same time as the mortgage. It's unlikely, but possible, that it will have better terms than increasing the mortgage you currently have. You need to check this carefully. Start by talking to your current mortgage provider.

Have you looked at other lenders for the land, there are specialists in this area rather than the main banks. I'd suggest you hop over to the mortgages board and seek the opinion of some mortgage brokers over there or find one in real life, you'd need a whole of market broker.

Denver235

Hi,

We would be looking at a secured loan.

Thanks for your comments,
Much appreciated :-)

gb12345

Denver235 wrote: »

We are currently only on an interest only mortgage and have been paying a chunk off the capital each year. We aren't in a fixed period. We basically need £26,500 more money to buy this house/ plot so we want to know if we would be better getting a loan or remortgaging?

Are you saying that the land is £26,500 or that all you need to borrow is £26,500 (and the rest comes from savings)?

Denver235

We need to borrow £26,500 and the rest is from savings.

Thank you!

gb12345

You will need to consider the equity that is in your house and the current mortgage plus the new lending to look at what the LTV. That may well steer you in one direction any way if your LTD is too high for one of the options.