Second mortgage for extension question

foofi22

Hi
We have a mortgage with First Direct. Current balance is £170k at a ~62% LTV and about 1 year into a 5 year fix.


We would like to renovate/extend a portion of the house and are looking in the range £50-60k cost. Some of this would be funded from savings, but "worst case" we would borrow £50k.


I phoned FD and they said we could take out further borrowing (subject to application etc) and that it would effectively be separate to the "main" mortgage. If we did


What I don't understand is what happens at re-mortgage time. For example, if the "second" mortgage were a 5 year fix also, the fixed terms wouldn't align.
What happens with re-mortgaging? Would we be "stuck" with FD? Or have to pay the early redemption fees on the "second" mortgage?


Thanks

kingstreet

You would have one mortgage split across two sub-accounts.

You would have to leave the first expiring part on SVR when it reverts; then renegotiate the whole amount onto a new FD deal when the second product ends, or remortgage to a new lender at that time.

Alternatively, if FD has any penalty-free products, switch the first tranche to one of those, while you wait for the expiry of the other. Then renegotiate the whole amount to a new FD deal when the second product ends, or remortgage to a new lender at that time.

Can you have the further advance on say a four year fix so the time difference between the two is shorter?

foofi22

Thanks, it does appear this will need some thought then. I'd rather avoid moving onto SVR where possible!


When I spoke with FD they didn't mention a 4 year fix (from their website they only offer 2 and 5 year). I'll ask them.


I noted that other lenders offer 3/4 year fixes - is an option to approach another lender or is this a complete no-no?

kingstreet

You can remortgage now and raise enough to repay FD and the extra you need, but you'd have to pay any penalty due to FD on repayment.

foofi22

Sorry when I mentioned approaching another lender I was referring to the additional borrowing only (i.e. keep the existing (original) mortgage with FD) - something in my head suggests this is not possible though!

kingstreet

You could approach a third-party type lender for a secured loan/second charge but you will pay more as a result.

FD has a first charge over your property so it should provide the lowest rates. Another "normal" mortgage provider would want that first charge, so repaying FD would be the only option to achieve that.