Additional Borrowing with Halifax

morganste

Good morning,

Hopefully someone can iron out a few questions we have before our meeting on saturday.

Back in 2012 we bought our house on the RTB scheme and borrowed 30k from the halifax over 8 years, 5 years fixed. (House valued at 75k)

We are now at the point where we need to do home improvements, full new kitchen, re-wire, plastering, flooring etc etc.

With the kitchen quotes we've had and the other work we want to do we've come to a figure of 25k that we would like to borrow on top of the mortgage.

My wife is on the mortgage on her own as at the time of buying the house i didnt meet the criteria for the mortgage (hadnt lived here long enough).

So the quesion is, are we more likely to get the additional loan if we first add myself onto the mortgage then apply or leave it as it is?

Also what would be Halifax' process of releasing the money, in general would they just pay the whole amount into the bank for us to pay for things as and when we needed to?

Sorry if i've made this long winded.

Steve

libf

You can't add yourself onto the mortgage without re-doing it, so you may as well do both things at once.

morganste

Fair point!

In which case i gather we may have to pay some kind of exit fee to end the 5 year fixed term early?

And would the interest rate change? I belive we're on 3.8% at the moment.

libf

There are usually early repayment charges, yep. You'd need to look at your mortgage paperwork to find out what that would be, and also speak with your current mortgage provider in case they have reduced fees if you then take out the new mortgage with them.

Interest rate will depend on what your current LTV is, what fixed period you go for (if any) and which lender.

Might be easier to get a loan rather than re-mortgaging, depending on what interest rates you can get on a loan?

Goldiegirl

There's no need to re-mortgage, unless you want too of course.

You could apply for a Transfer of Equity to add yourself on to the mortgage, and apply for the further advance for home improvements, all as part of the same transaction.

At the end of this, the existing mortgage would become a joint mortgage, you'd keep the same fixed rate product on the existing borrowing, and the further advance would on a product from their existing range.

Once the transfer to the joint names had been completed, they'd pay the money into your bank account, so that you can use it when you are ready.

One thing to note, a solicitor would have to be instructed for the Transfer - typical costs £400 to £600

Of course, all this is subject to their underwriting requirements

morganste

Thanks for the advice :-)

The transfer of equity sounds exactly like the type of thing we want to do.

If ive added up right we have about 5 years 6 months left on the mortgage, so could we in effect leave that running as it is and take the extra borrowing over say an 8 year period?

If Halifax would borrow the extra 25k with only my wife on the mortgage then i assume it would stop the need for the solicitor, as i dont see a massive problem with me not being on there.

kingstreet

Before you start messing about with the mortgage, contact the second charge holder, council or HA and ask them if they will grant you a deed of postponement to borrow into their discount.

If they refuse, the mortgage issue becomes moot.

morganste

I dont understand what you mean, sorry...

This is all a mine field for me, when the contract was signed halifax told us the HA no longer had anything to do with the house?

kingstreet

Right To Buy discount is "earned" over a five year period.

During that five years, the HA/Council has a second charge over the property to ensure it gets its money back if you sell. At the same time, it prevents the purchaser borrowing more money without permission.

This permission is known as a deed of postponement.

Your partner needs to ask the Council/HA for its opinion on borrowing more as this is borrowing into the discount and it may not be permitted.

morganste

Ah right, i get you now.

So this would only apply to borrowing on the mortgage?

So a personal loan (which i dont think we would get for this amount) would be a much easier option?

kingstreet

Anything secured on the property would require council/HA approval and the deed of postponement.