Getting rid of a London-sized Mortgage

Tropically

I now have TWO large mortgages.

Both for around £275,000.

I just closed on the place and haven't even been to see it yet! I am going tonight.

Will this be a bad decision? Only time will tell, but I'll be sure to keep you informed!

Cornish_mum

Congratulations Tropically

Amram1234

Well done Tropically - interesting to follow your story.

Tropically

So, MFWs, has someone ever said to you on this forum that you shouldn't overpay, you should invest it? Ever heard, "Mortgage rates are the lowest ever, and it would be better to put it in an ISA?" Well, let me tell you this!

I am trying to remortgage. Our fixed rate comes to an end soon. Although we've been making good money, I invested it all in stocks and shares and made no mortgage overpayments. But - now I need to remortgage. My investments are all down. They are 20% or more lower than in January. I don't know if they are lower than the amount I put in, because it is very hard to tell on the platform. Lenders are clamming up and we have a decision in principle but they will only lend on 60% LTV. We are at 65-ish%.

This means in order to remortgage, we have to find £15,000 to overpay or live on the SVR which is higher than our rent we are getting. But, we don't want to realise our losses and pull money out of our ISAs. It would have been much easier to overpay little by little so that we were at the lower LTV already. We could have done it! Instead, because 'mortgage rates are the lowest ever and the stock market is getting better returns' we are in a pinch. We are in a pinch because we didn't adequately consider our risk profile. We should have reduced our debt more, in tandem with investing. Maybe we should have done 30% OPs and 70% stocks/shares.

Anyway I haven't posted at all because I guess I had a little shame that I got a second mortgage and made no OPs, but now I need to make a whopping OP!

South_coast

What a bummer 😦 Hope it works out OK-ish for you. Very interesting food for thought, will add that to my "to ponder on" list 

Jessy103

Sorry to hear this, tropically. I wish you the best of luck x

Fletchasketch

Hi Tropically, 
Just a thought, but do you know for sure that you need 60% LTV to remortgage? The only reason I say this is because I was speaking to a broker friend last week who said that initially all lenders pulled all of their mortgages above 60%, but that in the past couple of weeks mortgages at a higher LTV are now coming back to the market, with even 90% available at HSBC. I would feel exactly the same as you about liquidating an ISA that has lost 20% of it's value and am keeping my fingers crossed that you have other options. 

Good luck!

Tropically

Fletchasketch said:

Hi Tropically, 
Just a thought, but do you know for sure that you need 60% LTV to remortgage? The only reason I say this is because I was speaking to a broker friend last week who said that initially all lenders pulled all of their mortgages above 60%, but that in the past couple of weeks mortgages at a higher LTV are now coming back to the market, with even 90% available at HSBC. I would feel exactly the same as you about liquidating an ISA that has lost 20% of it's value and am keeping my fingers crossed that you have other options. 

Good luck!

Hi Fletchasketch, everything is more complicated because we are currently not living in the UK. Our lenders are restricted because of that, unfortunately. But what your broker friend said reflects our experience, and we did not have any good products available two weeks ago and the better one just came back.

Our emergency fund is at £12,000 so we do have some cash. I am in favour of making the big OP but would rather not risk the  whole emergency fund to do so.

Fletchasketch

I'm glad to hear you have a few options...... If it were me,  my preference would be a mortgage at a higher LTV which allows overpayments when realistic (i.e. post CV crisis) rather than cashing in the ISA or using the emergency fund, but would use EF over ISA if it came down to it and think that would be Martin's advice too.

Savingtomove

Hi Tropically

What rubbish timing! I just wondered if the property value has dropped with the current circumstances and therefore you would have a smaller LTV?
STM x