Second Mortgage / Equity Release Info

kerbo2003

Hi all,

Looking for some help if possible. We currently own a home and are looking to borrow more money on our mortgage to do some home improvements.

We have had the house valued around 280k (we got the house for a cracking deal due to situation of the owners living abroad.)

We currently owe 215k with Yorkshire Bank on fixed rate until Jan 17. We have to pay a large redemption fee to get out of the current mortagae at the moment, so are considering a second mortagage with the same lender at 90% LTV.

If we were to lend the £65K which we have in equity at 90% LTV, would we have to pay a 10% depoit on the additional borrowing i.e £65K or on the full valuation- £280K. We put down a 10% deposit with our curent mortgage.

Many thanks

Mattygroves2

Assuming Yorkshire Bank will do it the maximum you will be able to borrow in total is 90% of the agreed value. So if your £280k is agreed when Yorkshire Bank do their valuation the total available will be £252k which would mean being able to borrow an extra £37k.

kerbo2003

Thanks for that. As we were thinking of a second mortgage I thought it would be 90% of the equity, but that must be my misunderstanding.

Mattygroves2

kerbo2003 wrote: »

Thanks for that. As we were thinking of a second mortgage I thought it would be 90% of the equity, but that must be my misunderstanding.

If you did that your overall LTV would be 97.7% after the new borrowing. I can't see them doing that.

Annisele

I don't think you are technically wanting a second mortgage at all. You want to stay with the same lender - so that lender will still have a first charge against your property. That means one mortgage, but potentially two different mortgage products.

In either case, you're not going to be able to borrow 97.7% of the value of your house. As Mattygroves said, on a 90% product you'll be restricted to a total borrowing of 90% of the value of the house.

kerbo2003

Much appreciated thanks!

That makes sense now, fingers crossed on the valuation