Mortgage puzzle. Can I keep it?!

andrewm1981

Hello all,

Someone else must have come into this situation, so I thought i'd ask the question.

I had a mortgage with A&L, which I have recently increased and ported across (or so i thought). I have a new mortgage with Santander which is fine, £600/month over 25 years.

My old mortgage, where I owe £68k, over around 9 years is still running, as i found out today. I'm paying £720/month,(in addition to my santander mortgage) at 1% over BOE base rate. I have the £68K in my bank, and I could pay it off now, and be square. But Im wondering how the new mortgage didn't absorb the old mortgage.

So basically, am I obliged to tell them, or can I invest the £68K (low risk), and probably return marginally more than the 2% that I'm paying in interest? basically make £50-£100/month for free?

If my investment was to go belly up, I have funds elsewhere that could bridge the gap in a poor investment.

thanks in advance

Andrew

Annisele

Did you sell the property the original £68k mortgage was secured against?

If you did, then something has gone very seriously wrong - and the buyers of your old place will struggle to register themselves as the new owner. I suspect your solicitor will be in touch PDQ to ask for the £68k back.

If you didn't sell, and if you still have the old property, then either: you didn't port at all (in which case you should be fine to keep the £68k); or you did port, and something has gone wrong (but possibly less seriously so).

Thrugelmir

I had a mortgage with A&L, which I have recently increased and ported across

If you ported your old mortgage product across. Then your mortgage will now consist of 2 sub accounts, old and new. Which will be at different rates of interest.

If you have cash in the bank why did you increase your mortgage if you had requirement to borrow the money?

andrewm1981

Hi,

Yes I did sell the property, and I guess the mortgage was secured against it. The bank haven't lost anything, they're still getting they're money every month but obviously from their point if view it would be high risk as its not secured against anything!

Yes, I must now have 2 sub accounts, as I've got two mortgages both requesting money twice a month.

I took out a mortgage as I was buying a house with the girlfriend, and was offered an excellent rate (0.9 above BOE term) and I thought I could do better than that by investing the money.... Which is what I want to do with the £69k! So do I have to tell them? Is the worst that could happen they ask for it back and I give it back?!

Perelandra

andrewm1981 wrote: »

I took out a mortgage as I was buying a house with the girlfriend, and was offered an excellent rate (0.9 above BOE term) and I thought I could do better than that by investing the money.... Which is what I want to do with the £69k! So do I have to tell them? Is the worst that could happen they ask for it back and I give it back?!

If I've understood you correctly-


I imagine they could ask you for this back.


Worst that can happen- you invest the £68k, the market falls, you lose out, and they then ask for the money back. Then you'd be in a bit of a pickle!

Annisele

andrewm1981 wrote: »

Hi,

Yes I did sell the property, and I guess the mortgage was secured against it. The bank haven't lost anything, they're still getting they're money every month but obviously from their point if view it would be high risk as its not secured against anything!

Yes, I must now have 2 sub accounts, as I've got two mortgages both requesting money twice a month.

I took out a mortgage as I was buying a house with the girlfriend, and was offered an excellent rate (0.9 above BOE term) and I thought I could do better than that by investing the money.... Which is what I want to do with the £69k! So do I have to tell them? Is the worst that could happen they ask for it back and I give it back?!

Ah, OK, I think I misunderstood.

You probably don't have two mortgages - you have two subaccounts of one single mortgage. Both of them are secured on the house you're living in.

You're perfectly allowed to borrow more than you need to buy a property (subject to LTV/your income/credit etc). So long you and the bank both have the amount of money you expected to have, all is well.

andrewm1981

hi,

sorry, I think its me explaining things incredibly badly!

house 1 had a mortgage on for £125K. bought this 10 years ago, on a 17yr mortgage. since sold this house, having paid off apx half the mortgage. so 67K paid off, 67K still owe. I sold that house for £125K, used half for the deposit on the new house, and half is in my bank still. still paying £700/month mortgage.

I "ported" the mortgage across, took a mortgage for £250K, and used 67K from the house sale to buy the new house.

So no, I don't have 2 sub accounts(sorry!). just 1 house, with a proper mortgage, and a second old mortgage which Im still repaying, but instead of having bricks and mortar to show for it, I've got money in the account!

I did phone them up to tell them twice, but after being on hold/passed to people (as they dint quite understand what was happening) I got cut off (30 mins per phone call) so I got quite annoyed hence thinking I may just invest instead!

andrew

Trying_to_be_good

As far as the bank are concerned, I think you have a mortgage with two parts (called sub accounts), so the total amount of the mortgage secured on your new property is the old £67k, ported across (not repaid, as it is in your account) plus the new borrowing.

They probably (should have) credit checked you against the total borrowing, not just the new bit.

So it's probably all secured against the new property, and you pay separately for the two bits of mortgage, which are for different loan amounts, different term and different interest rates.

Up to you if you're able to make more money on the funds in your bank account than you're paying in interest!