Withdrawing equity and extending term

alifeforfriend

Hi Everyone,

Last year i bought a flat for 144k with 15 percent deposit. So the amount i borrowed was around 122,400 pounds.

I went for fixed 2 year which will expire in april 2017.

My enquiry is when my fixed term expires and i decide to stick with the same bank and go for another fixed term product , am i allowed to borrow extra money towards the equity on my flat. Currently my flat is valued around 200k. So i have lots of equity in it,and i was looking to borrow additional 20k on it . Also am i allowed to change the term ?

Lemonsqueezer78

By change, do you mean extend the term?

What do you need the £20,000 for?

I ask, because your lender probably will too....

alifeforfriend

Lemonsqueezer78 wrote: »

By that, do you mean extend the term?

yes i mean extending term and borrowing more money when looking to fix new deal next year with the same lender

£ 20000 i am looking for investment, as getting through mortgage on cheaper rates

Lemonsqueezer78

OK, just checking - "change the term" can mean shorten or extend.

As I said above your lender will very likely ask what the purpose of the additional borrowing is. They may also ask for a valuation on your property, which you will need to pay for, however depending on the lender, this might depend on whether their own house price index data comes to a figure close to the value you are suggesting or not.

If they accept your reason for the additional borrowing, and you meet affordability and other criteria for the mortgage term - and they agree the property value, then yes they may agree to this extra borrowing and a changed term.

alifeforfriend

Lemonsqueezer78 wrote: »

OK, just checking - "change the term" can mean shorten or extend.

As I said above your lender will very likely ask what the purpose of the additional borrowing is. They may also ask for a valuation on your property, which you will need to pay for, however depending on the lender, this might depend on whether their own house price index data comes to a figure close to the value you are suggesting or not.

If they accept your reason for the additional borrowing, and you meet affordability and other criteria for the mortgage term - and they agree the property value, then yes they may agree to this extra borrowing and a changed term.

but can this be done through the same lender or will i have to remortgage through a different lender

Lemonsqueezer78

It can be done through your existing lender usually. You will be making an application for a new mortage product with a new term and increased borrowing, so it won't be processed/scored as a simple product change.

A change like this to both the term and amount will likely be a new full application for a new mortgage product, with a full affordability check and a credit check

Lemonsqueezer78

"Investing" how exactly? In more property?

alifeforfriend

Lemonsqueezer78 wrote: »

"Investing" how exactly? In more property?

yes but overseas property

So a new product with the same lender will require new valuation or they will just carry out a desktop valuation?

Lemonsqueezer78

It depends on the lender. If you are asking for additional lending on the basis of a new valuation, then your lender may use available house price index data from the land registry to work out what they think your property is now worth. If you think it is higher than that figure OR it has increased so substantially that their policy simply dictates that a new valuation is required then yes, a new independent valuation may be needed.

alifeforfriend

Lemonsqueezer78 wrote: »

It depends on the lender. If you are asking for additional lending on the basis of a new valuation, then your lender may use available house price index data from the land registry to work out what they think your property is now worth. If you think it is higher than that figure OR it has increased so substantially that their policy simply dictates that a new valuation is required then yes, a new independent valuation may be needed.

Many thanks for your help and sharing your knowledge. Much appreciated