Remortgage and borrowing more

Lunge

I am remortgaging and will be borrowing slightly more so there will be a small shortfall of £10k or so when I switch lender.

I have the option of either overpaying by £10k on my existing mortgage before they prepare the redemption statement or transferring the funds direct to the solicitor.

If I choose the latter, will they need to look at my bank statements again? I will be going slightly into my overdraft to make the payment, so reluctant to show my bank statement.

Thanks

amnblog

Sorry - Is it me, or does this post not make sense?

kingstreet

No. It isn't you.

"Borrowing slightly more so there will be a a small shortfall of £10k or so" doesn't make sense.

You are borrowing enough to pay off your existing mortgage, ie the same as now; or you are borrowing less and using some savings to make up the difference.

In answer to the question, the solicitor handling the transaction is likely to ask for evidence of the source of funds.

cats_ahoy

I have a related question, not sure if it warrants a new thread or not....

Currently 5 months into a 3 year fix, bought current house for £86500 in March 2011, overall balance now is down to approx £71000. House was valued at approx £92K 5 months ago when we got fixed deal (we got 80% LTV product), online calculators predict current price of approx £100K. The mortgage conditions state we can port it if we move house.

My question is:

I have seen a house I really like for £125K, came on the market last week. I have been considering moving house for a while, but not done anything about it, so I would be right at the start of the moving house process.

How common is it for people to:

a) Move to a more expensive house and increase their overall amount borrowed? What are the most common options for borrowing more money?

b) Have an overlay between buying a house and selling the current one, so effectively paying two mortgages?

Things I believe are in our favour:

We have so far overpayed around £7500 since we bought the current house, and with the latest fixed term product, decreased our term to 11 years, as we can currently afford increased mortgage payments. We have a combined income of £45000, both 26, no kids, only debt is £4000 student loan.

I am planning to ring our mortgage provider tomorrow to discuss this, but does anyone have any comments on this? Would it be a very bad idea to borrow more money and bridge the mortgage while waiting to sell, or can it be quite common?

Any comments would be appreciated, thanks.

Thrugelmir

The difference between the existing mortgage ( the amount to be ported) and the new mortgage, is topped up with an additional loan from the products available.

Can you afford 2 mortgages? Selling a house can be a protracted affair. Not just a mortgage to cover either there's rates etc that need to be paid.

cats_ahoy

We currently pay approx £650 a month (approx £185 of that is interest)

I believe we could pay twice that for a sustained period, as our monthly income after tax etc is £2700.

That would leave £1400 for food, bills, travel, savings etc, which is more than doable at the moment.

Obviously this plan only works if both of us keep our jobs.

If it sounds like something that would be financially irresponsible for someone in our circumstances then we wouldn't do it.

Thrugelmir

cats_ahoy wrote: »

We currently pay approx £650 a month (approx £185 of that is interest)

I believe we could pay twice that for a sustained period, as our monthly income after tax etc is £2700.

How much are proposing to borrow initially to fund the new property. Until the equity is released from the old property. .

cats_ahoy

I am going off a predicted value for current house of £100K, so:

- Presume we would hopefully get offered around £95K for current house.
- The new house is on sale for £125K, so offer somewhere between £120-125K.

Difference of £25-30K.

So we would need to borrow £125K (presuming we pay legal, estate agent and other fees separately) until old house is sold.

cats_ahoy

So looking into this some more I guess I would need a bridging loan (preferably from my Mortgage provider) for £100K, and a second mortgage for £25-30K?

Does this even sound reasonable (without spending ridiculous amounts on loan fees etc)? Also would we need to save up a second deposit for a second mortgage or bridging mortgage/loan?

Thanks for the replies so far.

Thrugelmir

cats_ahoy wrote: »

So looking into this some more I guess I would need a bridging loan (preferably from my Mortgage provider) for £100K, and a second mortgage for £25-30K?

Does this even sound reasonable (without spending ridiculous amounts on loan fees etc)? Also would we need to save up a second deposit for a second mortgage or bridging mortgage/loan?

Thanks for the replies so far.

In which case the commitment will be well above that you mentioned previously. ( Twice £650). I doubt that you'll find anyone willing to operate at a 100% funding level. For bridging finance you could be looking at as much as 1.5% per month. Never has been a cheap option.

Hence why people sell their own properties first. Then start looking for another property.