Paying off mortgage with lending at a lower rate

confusedbunny368

Is it possible to get extra borrowing on a mortgage at a lower rate than my fix, say 1.7% and then overpay on the original mortgage which is 3% with that new mortgage? I've been trying to work this out. I think there could be a saving if I choose a deal with no fees and there is no penalty for overpaying my first mortgage thus meaning in a round about way we are decreasing the bigger mortgage leaving a smaller one at a lower rate. Sorry I hope this makes sense.

Does anyone know if this is possible?

Thanks

edinburgher

Nope, as your lender needs to secure the first charge against your property for the purposes of mortgage lending. Two lenders can't be first

confusedbunny368

edinburgher wrote: »

Nope, as your lender needs to secure the first charge against your property for the purposes of mortgage lending. Two lenders can't be first

Hi, my lender is Nationwide, I am borrowing further lending for home improvements at a lower rate than my original mortgage. If I don't use all the funds renovating in theory could I overpay first part of mortgage?

Thanks

edinburgher

So same lender for both parts of lending?

confusedbunny368

edinburgher wrote: »

So same lender for both parts of lending?

Hi, yes that's right.

edinburgher

Really confused, just sounds like you're describing a remortgage where you need to withdraw some of the equity?

Wouldn't you be better off asking to remortgage to the new rate for all of your borrowing?

elantan

They dont tend to do that Ed ... I am with the NW myself and have two mortgages .. one at 4.69% and one at 3.29% .. i tend to overpay the 4.69% one ...

Op i am sure if you were to not say tell the NW then how would they know ? however, be careful what their terms are... I am only allowed to overpay by £500 a month, so if i had say £10k extra it would take me 20 months to overpay it all ... could be worth it though

edinburgher

Why not go elsewhere then?

Edit: 4.69%? Ouchy!

elantan

its been ouchy for a long long while .... i have done my sums and my ERC makes it not worth it ... so its been a case of sucking it up and getting on with it

confusedbunny368

edinburgher wrote: »

Really confused, just sounds like you're describing a remortgage where you need to withdraw some of the equity?

Wouldn't you be better off asking to remortgage to the new rate for all of your borrowing?

I've confused myself! Basically got a huge ERC if we remortgage now. But the rates for further lending for our home improvement are so low in comparison.

elantan

exactly the same situation i was in