Stuck on SVR - unless I borrow more

[Deleted User]

One of my mortgage sub-accounts is now only £21K but I can't switch because lender will only do for accounts more than £25K.

(I dont want to switch the entire mortgage because I've got a lifetime tracker of base+1.1% on the rest)

Only way to be able to get a better fixed rate is by borrowing more. Weird I know. Minimum additional borrowing is £10K (so taking it to £31K)

Could I do this?

- Borrow the extra £10K taking it to £31K. Then get fixed deal of 3% for 5 years.
- Allowed to make 10% overpayments a year so straight away pay back £3100.
- Stick the remaining £7000 in savings account.
- Year 2 pay back another 10% as an overpayment - approx £23K by now I guess. So another £2300 paid off.

Wonder how this would compare with just leaving £23K on SVR of 4.25%?

[Deleted User]

Alternatively, I see its only 1% early repayment charge in first year.

So I could pay £3100 of the extra £10K with no charge. Then the other £6900 would cost me 1% I guess- just £69?

End result is I'd be back to my original outstanding of £21K on a much better rate.

Not sure how happy the bank would be that I'd borrowed an extra £10K and then paid it off straight away.....

[Deleted User]

Reckon about £250 a year less interest this way :-)

getmore4less

Why a new thread?

https://forums.moneysavingexpert.com/discussion/5897579/sub-accounts-less-than-25k-outstanding

ACG

First sign of madness is talking to yourself :P

Thrugelmir

Have you considered overpaying this mortgage account?

obay

Have you considered an unsecured loan on the amount?

[Deleted User]

Thrugelmir wrote: »

Have you considered overpaying this mortgage account?

I would if I could BUT thats the point - Im paying SVR UNTIL its paid off.

[Deleted User]

obay wrote: »

Have you considered an unsecured loan on the amount?

I did think of doing that. Can get a decent rate of about 3% over 7 years and obviously this would save a LOT of interest.

Cost wise its about £100 a month more so not too bad.

BUT, I do have other debts and move credit card debt around a bit from one 0% to another. Just concerned that if I took out a £20K loan then it mean I'd never be able to get another new CC or loan?

£20K less on mortgage and £20K loan OR £20K on mortgage. Not sure which is best credit score wise?

[Deleted User]

getmore4less wrote: »

Why a new thread?

https://forums.moneysavingexpert.com/discussion/5897579/sub-accounts-less-than-25k-outstanding

Sorry can't resist - 👮

MortgageMamma

There are lenders who will do a remortgage for less than 25k, I've just made a quick call and got you a list whilst making a coffee.

Barclays, Coventry Building Society, Halifax, Leeds Building Society, Principality Building Society, Skipton Building Society, Santander (specific products for <25k, so speak to them before assuming you can have a published deal), Virgin Money.

As the loan amount you require, a fee free deal would probably be most beneficial, but ensure you do the maths.

I am not saying you fit the criteria of these lenders, just felt you were in a position where you could benefit from a starting point if you are doing your own research.

If you want a broker to do the research, you will most likely have to pay a fee to supplement the commission from the mortgage lender, as its likely to be nil or virtually nothing for such a small loan amount so is unlikely to cover the brokers costs doing the case - which for such a small loan amount could cost more than the savings whilst stuck on SVR.

Good luck.

Ps if you are interested in over payments, read the lending criteria of each mortgage on the lenders website or do a live chat with them and watch out for the early repayment charges too.

MM