Remortgaging on Shared Ownership

Happydays,_gone_away?

Hi,

Just hoping for a little guidance before I approach my lender to see what the reality is.

I am currently 13 months into a 3 year mortgage (Nationwide)on a shared ownership property on 60% of the value. Over the last year I have made a number of overpayments and the property market in my area has recovered significantly and I could be looking at my LTV moving from 70% to around 60% on my share (around 37% of the total property value/down from 43%) if I remortgaged.

I would however face a 4% ERC (£2100) if I remortgaged.

My current deal is 2.74% pa interest fixed until Dec 2016. I had originally planned to keep paying extra and try to increase my share at the end of the fixed term but now I'm considering increasing the borrowing to exploit the curreny low rates.

I just started a new job and increased my salary, the additional 40% would be affordable at 4x salary but Ive only been in my new position for a month. Do I need to wait?

Can I beat the current rate sufficiently to make the ERC worth paying?
Can I take a 2nd mortgage on the property and avoid the ERC?
Have Nationwide played ball and reduced the ERC if you borrow more with them?

Any advice on how to approach Nationwide would be most appreciatied.

Thanks

kingstreet

Are you looking to staircase?

Happydays,_gone_away?

Possibly.
Although the increased legal costs would be a factor in the decision.
I could afford to but would have to use more of my savings to cover that.

kingstreet

So what's the purpose of the remortgage then?

I'm considering increasing the borrowing to exploit the curreny low rates

What's the plan for the extra money you will borrow?

If you need to borrow more, you can ask for additional borrowing, which will be more expensive in the short-term.

BTW if you stay with your existing lender and ask for a new deal, it's a customer retention product. A remortgage is a new mortgage with a new lender to repay the old one.

If you go back to Nationwide for a new deal, you will have to pay the ERP to escape the old one. You will also have to pay this yourself, as you cannot add it to the loan.

On an average sized mortgage, it is unlikely you will save £2,100 in the two years remaining of the old product, so that would appear to reduce the appeal of making any alteration.

Happydays,_gone_away?

Thanks kingstreet.

Thats what i thought, that i probably could not exploit the lower rates and stay at the same level of borrowing.
I will keep piling up the cash ready for staircasing and revisit in a few months.

The increased borrowing would only be for staircasing.

Happydays,_gone_away?

Theorectically,

Is it possible to take a 2nd product with nationwide for the additional borrowing only?
And then combine in 2 years (subject to circumstances) or later?

(unlikely that i would do this but good to know)

kingstreet

You couldn't combine them, once the sub accounts are set up, but you may be able to take both in the same product.

You would need to discuss this with the lender directly.