Can anyone confirm... Remortgage value query - First Direct

Bean_69_99

Hi all,


I've done some searching and seen a pretty common response to similar questions but this flies in the face of what First Direct told me a few months ago...


Basically I have an outstanding mortgage of circa 71k, house value has increased, mortgage deal has ended so I'm looking for a new deal and releasing some equity (I bought 5 years ago :beer: )
I rang existing lender about a new deal and additional borrowing, they advised its two separate processes, I need to do one first then do the other, cannot be done together.


So I then rang First Direct to see if a remortgage would be a simpler process, go to them for new deal, for a higher mortgage, pay the old and release the surplus funds for home improvement.


However, FD also told me that I would have to do the remortgage for the same value of the existing debt (could not be more) then a second process to apply for additional borrowing. Thus the same as staying with existing lender.


However since looking on the forum the advice has been either apply for additional lending, or look at a new arrangement all together.


Can anyone clarify, as FD just say that's the way it is everywhere...?!

kingstreet

No. It isn't.

If FD really does it like that, it is alone.

Bean_69_99

So I'm right in thinking, if I stay with current lender, they want to ask questions such as why I want the additional borrowing.


If I go to a new lender and look for a new deal from scratch, I won't?
I ask as, when I spoke to new lender they said they need schedules of work and quotes etc if its for home improvement... not all the additional lending I want will be for home improvement...
I'm in a far better financial situation than I once was, and buying 5 years ago means the price I paid (initial mortgage valuation) is much lower than current value... what I don't want is declined mortgage offers and costly valuations etc either way...

Thrugelmir

If the work is for home improvement then providing quotes shouldn't be an issue. Otherwise how would you know the amount you need to borrow.

kingstreet

Bean_69_99 wrote: »

So I'm right in thinking, if I stay with current lender, they want to ask questions such as why I want the additional borrowing.

Yes.

If I go to a new lender and look for a new deal from scratch, I won't?

No. They will ask the purpose of the borrowing in excess of your existing mortgage.

I ask as, when I spoke to new lender they said they need schedules of work and quotes etc if its for home improvement... not all the additional lending I want will be for home improvement...

Yes. If you say "home improvement" you will be asked to provide evidence as what you intend may affect the security/valuation.

I'm in a far better financial situation than I once was, and buying 5 years ago means the price I paid (initial mortgage valuation) is much lower than current value... what I don't want is declined mortgage offers and costly valuations etc either way...

Most remortgages are free of valuation and legal fees, so you stand to spend/lose nothing.

For avoidance of doubt, the question I answered earlier was "do other lenders, when you remortgage to them, insist on you doing the refinance bit, then the additional borrowing bit separately as FD has suggested it does?"

To which I answered no. Most lenders simply ask for the total you want to borrow and the purpose, such as refinance, home improvements and debt consolidation, or a combination and it's all done at once.

Bean_69_99

Thanks all for the great help and replies, helping loads.


Situation is... I live in a house that needs a total makeover... rewire, decoration throughout, new kitchen etc.


It has been like this since I first bought it 5 years ago but now I want to get the ball rolling. What I don't want to do however is spend a fortune doing it up, so some of the work will be done myself / by friends where legally possible.


Am I best to get quotes and evidence for the sake of the mortgage then forget them, or will there be clauses placed by the lender?


Current situation is I have paid some of the mortgage off and values have gone up in the area so now I have around 55-65% equity. I want to release this back up to circa 75% with a view to then using the money to maximise the value of the house to sell and move on in about 2 years.


I also have some cash in the bank saved up, but if I've got the equity released it's there as safety net for any additional work I don't currently plan and then I can use it to overpay (deals I've been looking at allow it)...


I don't necessarily need the money, but I want it while the rates are low to suit my plans... I appreciate the banks aren't looking to lend for this, but it is what I'm trying to achieve.


Any further help is greatly appreciated.

Gentoo365

Seems a bit odd. You can remortgage for more than your existing mortgage. Maybe they were answering you literally.

i.e. if you moved to a new bank for a larger amount that would be called a remortgage. It would only be called a further advance if you asked them for more money later (hence the term further advance).

I suggest you ring FD again and ask them if you can remortgage for a higher amount than your existing borrowing.

Thrugelmir

Gentoo365 wrote: »

Seems a bit odd. You can remortgage for more than your existing mortgage. Maybe they were answering you literally.

The new lender may question the purpose of the release of the equity. Days of property being an ATM are more or less over. As lenders are no longer chasing business at any cost.