Additional loan or Remortgage

benjii

I would be really grateful if you could comment on the following situation.

My wife and I bought 60% of a shared ownership property in 2013 and now after 1 year we would like to buy the remaining 40%. We have two options:

Option 1: Our mortgage lender offered an 'additional loan' product at a relatively high rate of 4.69% to finance this purchase.

Option 2: We've done the sums and we would be better off if we could end our existing mortgage deal (2-year fix at 3.39% running to 2015), pay the early repayment penalty, and switch to a new mortgage deal with the existing or new lender. It would be one mortgage covering the whole property.

Irrespective of the financial aspects, do you think option 2 is technically possible?

Thrugelmir

The second option is technically possible.

Financially viable is another matter.

kingstreet

The equity you have in the property and/or your savings which will fit the mortgage within the lender's maximum loan to value may be the issue.

Many lenders won't accept former SO property, even when staircased to 100%, so be careful and don't forget the stamp duty implications, unless a market value election was made at the outset.