Advice Needed - re-mortgage

billa_champion

Hi all

Need a bit of advice so thought of you guys! :beer:
I have a two-part mortgage on my house and overall pay £1600 a month.

(1) £180k at 3.98% (which switches to 2.3% on 01.01.2014) (£900 a month going down to £730)

(2) £120k at 4.99% (£700 a month)

My question is which mortgage should I borrow £40k off: bigger loan/lower rate or smaller loan/higher rate?

My calculations show that my repayments (overall) will stay at £1600. My mind says the one with the lower interest rate one but in real world terms does it matter as I am still paying the same overall? Maybe someone with more knowledge can shed some light?
Oh! In case you need to know, the property is worth about £415k.

ACG

My question is which mortgage should I borrow £40k off:

This makes no sense? How can you borrow an extra £40k and still be paying the same no matter what rate it is on?

Or am i reading it wrong?

billa_champion

Hi ACG - thanks for responding.

If I increase mortgage 2 from 120 to 160 at 4.99% it will be £884 a month
If I increase mortgage 1 from 180 to 220 at 2.30% it will be £888 a month

...this is according the locoblades (sp?) spreadsheet.

GMS

Any new borrowing will be at the rates available today.

The lender would choose the rate not you.

ACG

I was just going to say do the lenders still have those rates available, but GMS beat me to it.

You need to check what rates/deals the lender has available.

Also on a side note - this is something i would be checking with a client but if you have 2 parts to your mortgage and now you are thinking about a third, is there something you need to think about? Borrowing more and more can only go on for so long. I dont necessarily want an answer, im just making a point for you to think about to decide if there is an issue or not.

terrencetrentderby

GMS wrote: »

Any new borrowing will be at the rates available today.

The lender would choose the rate not you.

I wonder if it will be the cheaper or the more expensive rate? Hmmm

ACG

At 85% LTV its unlikely to be at 2.3%.

GMS

terrencetrentderby wrote: »

I wonder if it will be the cheaper or the more expensive rate? Hmmm

It will be the rate on offer from the lender at the point of application. Any rate(s) you have now are irrelevant.

terrencetrentderby

GMS wrote: »

It will be the rate on offer from the lender at the point of application. Any rate(s) you have now are irrelevant.

Lenders tend to offer different rates at the same time though. What I'm guessing the OP is really driving at is, what approach do lenders tend to use for additional borrowing where 2 part mortgages are in operation.

I'm in a similar boat to the OP. My lender is The Woolwich. Like most lenders they do different rates depending on the LTV and certain other criteria. Which of their existing deals am I likely to get an extra £5k of borrowing on?

dimbo61

Can you not check on the lenders website?
With the YBS they have existing customers "Borrowing More"
this brings you to Additional Loan Products with LTV of 85% or 75%

kingstreet

You have one mortgage, split into two sub-accounts, for interest rate/calculation purposes.

If you request additional borrowing, you'll have a third sub-account and the rate will be that offered by the lender for additional borrowing requests today.

There are some lenders who will allow you to re-borrow overpayments made previously at the original rate, but you've said nothing to indicate if this is likely to apply to you...