Additional Borrowing and Subsequent Remortgage

jc86

Hi All,

Just after some basic info....

We have a mortgage at the moment, LTV is probably at about 79%.

We are interested in additional borrowing to help fund an extension. Our lender has been pretty helpful, and essentially advised us that we would have two mortgages going forwards: a main one, which we are fixed into for another 3 years, plus one for the extra which we borrow, which is fixed for 2 years.

Obivously they will be two different products running on two different timescales.

Can anyone explain to me how we could reconcile them back into one mortgage further down the line. I cant quite get my head around what the overall LTV would be. So when we want to remortgage the smaller loan after two years, how would it work?

I guess one option would be to remortgage our "main" mortgage after 3 years, and pay off the smaller one with savings if we can do?

Cheers

Foxy-Stoat_3

As you haven't told us numbers, basic calculation :

What you owe divided by the house value will give you the LTV%

You would remortgage after 36 months so avoid the early repayment charges of the main mortgage.

jc86

Foxy-Stoat wrote: »

As you haven't told us numbers, basic calculation :

What you owe divided by the house value will give you the LTV%

You would remortgage after 36 months so avoid the early repayment charges of the main mortgage.

Thanks - think that makes sense.

So I would just pay the SVR on the smaller mortgage until the term is up on the main mortgage. Then, add the total debt together, divide by the house value, and remortgage into a single mortgage in the conventional way?

Foxy-Stoat_3

Thats about it. Depending on the SVR it may work out cheaper to remortgage in 2 years, but that will depending on the redemption charges on the main mortgage.

Question for your current lender I think.

How much are you borrowing and whats the current house value?

jc86

Foxy-Stoat wrote: »

Thats about it. Depending on the SVR it may work out cheaper to remortgage in 2 years, but that will depending on the redemption charges on the main mortgage.

Question for your current lender I think.

How much are you borrowing and whats the current house value?

We only want another £10k or so, we're funding most of the extension from savings we retained when taking out the original mortgage, as we knew we would want some capital. House value £310k now, will be £350k + once completed (we hope).

As the additional loan is small, I am guessing swallowing the SVR as you suggest is the best way forward. Just wasnt really sure how two mortgages turned back into one, and how complex that was.

Foxy-Stoat_3

Thats not too bad then, your LTV should be the same, better or a lot better in 3 years time.