Top up / second mortgage with different lender

Hi everyone,

I was wondering if it was possible to get a top up / second mortgage with a different lender. I've had some conflicting information about this.
Our situation is we're moving house, but we have a 5 year fixed term mortgage (didn't anticipate the move due to job relocation), which we're 2 years into. The house we are buying would require 30k extra (buying for 300k, selling for 270k, have 185k left on current mortgage), and based on mortgage in principle we've had from current lender this isn't an issue. We borrowed less than we could have done buying our first house, so am confident we eligible for more. There are 9k fees for leaving mortgage early, and Virgin told me that it would be 4.5k fees to take out additional lending with them.

We spoke to one mortgage broker who said it was ok to port over the current mortgage and to get the second mortgage from another lender and he could shop around. He also said that we shouldn't have to pay the 4.5k fees for taking out additional lending.

I've spoken to a different broker today who has told me that is incorrect, we would only be able to borrow the additional money from our current provider.

I really have no idea who to belive as this is all new to us, the house we are selling is our first home and our first mortgage.

Many thanks in advance!
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Comments

  • ACG
    ACG Posts: 23,677
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    You can only get the additional from your current lender - in the main.

    There are what is known as second charge mortgages/secured loans - but they are going to be more expensive that your current mortgage will offer you. You can not get a first charge residential mortgage from say barclays and another first charge mortgage from Halifax.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thank ACG,
    When the mortgage advisor from this afternoon explained it, it did make sense, as I can understand a lender would not share ownership of an asset (a property) with another lender.

    I'm now confused as to why 2 other brokers (I forgot, I've actually spoken to an additional mortgage broker) would be confident that I could do it.

    The only thing I think is that the 2 who said I could, were the Estate Agent's in house brokers. The one from this afternoon was an independant mortgage broker I'd found locally through vouchedfor.

    If anybody else is able to give help that would be great.

    Thank you
  • ACG
    ACG Posts: 23,677
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    A little worrying, but I suppose on a technicality they are not completely wrong.

    But estate agent based brokers tend to be new brokers with limited experience. We all have to learn at some point.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • kingstreet
    kingstreet Posts: 38,688
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    £4,500 fees for a new mortgage inc a port of the existing rate?

    Wrong end of the stick somewhere. Don't believe it. Please elaborate.

    Here's the process. Your existing mortgage will be repaid from the sale proceeds of your current property. You will take out a new mortgage with your existing lender for the total you need to borrow. On completion, the rate from your old mortgage will be transferred to your new one, with any increase in the amount borrowed being offered on one of the lender's new products.

    You should pay valuation fee, possibly a product fee but this is unlikely as you would choose a no-fee "top-up" product to sit on top of your current rate.

    As ACG has said, if you don't borrow everything from VM, you'll need a second charge lender and this is considered more risky and will involve higher rates.

    The port and top-up would normally be the most cost-effective and sensible option.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • From our mortgage contract:

    Additional borrowing will not be available on this mortgage product

    If you require additional borrowing to purchase your next property, you will be able to apply for a new product for the additional amount upon the terms of the porting product range available at that time.

    As an alternative to transferring the remainder of this mortgage product to your next property, you can apply for a new mortgage upon the terms of the product range available at that time. If you complete the new loan within three months of repaying this loan we will refund half of any applicable Early Repayment Charge.

    Our early repayment charge is currently around £9000.

    Hope this helps! I can't say I 100% understand this, I thought I had, but maybe I've misinterpreted it.
  • kingstreet
    kingstreet Posts: 38,688
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    thehoorays wrote: »
    Additional borrowing will not be available on this mortgage product
    Yes. You'll port the current rate and use a new product for the increased borrowing as stated earlier
    If you require additional borrowing to purchase your next property, you will be able to apply for a new product for the additional amount upon the terms of the porting product range available at that time.
    Yep. Nothing different to what's been said.
    As an alternative to transferring the remainder of this mortgage product to your next property, you can apply for a new mortgage upon the terms of the product range available at that time. If you complete the new loan within three months of repaying this loan we will refund half of any applicable Early Repayment Charge.

    Our early repayment charge is currently around £9000.
    Right. So instead of a port + top up, you take the whole new mortgage on a whole new rate. Then your ERC will be payable and if you complete your new mortgage within three months of redeeming the old one, you'll get half the money back.

    You can only port if your sale and purchase are concurrent. This means happening on the same day.

    If you are going to sell before you buy, you can't port and you will have to pay the full ERC, getting half back if your purchase completes within three months, or nil back if it doesn't.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Kingstreet, would you mind just clarifying this please.
    You mentioned that 'You'll port the current rate and use a new product for the increased borrowing', but also 'So instead of a port + top up, you take the whole new mortgage on a whole new rate',
    so is the only option that we take a new mortgage with Virgin on a new rate?
    I understand the ERC side of things, just unclear if we'd be having 2 different rates (i.e. keeping the original amount borrowed on original rate, plus the additional amount on new rate), or just a new product on new rate.

    Cheers.
  • kingstreet
    kingstreet Posts: 38,688
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    It's one or the other.

    To avoid the ERC you take your new mortgage with VM and transfer the old rate for the current amount and pick a new rate for the new/extra bit.

    To pay the ERC you take your new mortgage with VM and don't transfer the old rate for the current amount and you pick a new rate for the whole lot.

    If you take the second option and you complete your new purchase within three months of redeeming the old mortgage, you will get back half the ERC you have paid.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Ah, just one thing about the ERC I need to clarify,

    If we can sell and buy on the same day, we don't pay the fee?

    How possible do you think this is? We are selling to first time buyers who are with parents who have said they are not in a rush (bigger deposit saved for them) so we could dictate the sale date within reason (I mean not months late, but maybe by a week or so). We are also buying from someone who is in a good position, who is looking for a quick sale, we think he's some sort of property person, as we've been told he's currently deciding whether to go into a rental flat that he owns that's empty, or one of the other 2 houses he owns, so basically he has options. He just wants to get things through as quickly as possible (as do we).

    Many thanks!
  • So it seems like the first option is better? Sorry for the probably obvious questions! First time selling for me, and never had any personal loans, etc, so it's all a bit over my head!
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