Additional borrowing whilst on a fixed rate deal - is it worth it or will it create problems?

Chris94

Long story short I currently own 60% equity of my flat with around 54k left on the mortgage. The Scottish goverment owns the other 40% equity and I want to buy it back (I would pay 40% of whatever the flat is valued at at the time). Unfortunately my income didn't meet their affordability criteria to borrow the amount I would need to buy back the extra 40%. I have however graduated and hope that within the next few months, but certainly within the next year I will have secured a graduate job with an income sufficient to borrow the full amount I need.

Problem is, I am coming to the end of my initial fixed 2 year deal and I am looking at renewing it to secure a lower interest rate. However, if I have my way and end up with a higher paying job, I will end up being able to afford the full amount whilst being stuck on the mortgage deal for up to another 2 years. Meanwhile house prices are predicted to rise a lot in my area in the next few years and I'll have to pay a lot more to buy back that 40%. (Add to that my flat is in real need of a new bathroom and double glazed windows which will no doubt raise the property value).

So the obvious solution is additional borrowing. But it is my understanding I can't just lump this onto the existing mortgage, and essentially I'll have my mortgage for my initial 60% and additional borrowing on a separate 2 year deal, with its own, (I think) much higher interest rate than the initial mortgage. (As I'm already an existing customer).

Has anyone done this or had experience with this? I am about to commit to the new 2 year deal, but don't want to end up shafting myself or putting myself in a position where I have to pay more to buy the remaining share or where I am reluctant to spend money on essential home improvements in fear of raising my flat's valuation and hence having to pay more to buy it back. To be honest, I wouldn't mind an early repayment charge on the additional borrowing if I were to move lender at the end of the initial mortgage's deal, but having to pay 2x as much or more in interest on that additional borrowing equates to over an extra £1000 in interest per year.

dimbo61

Why not speak to the mortgage lender you are currently looking at taking out the new deal with and ask.
You could stay on the SVR until you get your new better paid job and then apply to take on the 40% equity loan as well as the existing mortgage.