Remortgage?

Brookside88

Hi all,

Hoping you clever people can help me with this

We're currently in a 5 year fix with our lender at 2.38% with £103k ish left to repay and 2 years 11 months left on the fix. House was bought for £116k 4 and a half years ago and approx value now is £160k. Payments are £398 a month

We had the house double glazed and a new porch 3 years ago and took out a loan for the cost at £17k. This was put through in my name solely and its causing me some issues obtaining credit as my affordability looks poor. The interest rate on the loan is around 8% with Barclays partner finance on a 25 year term. Payments are £157 a month. (Noted this was not the smartest way to finance)

I'm wondering if it's worth remortgaging mid term as I've just run the figures through money supermarket and with the additional borrowing to roll the loan into the mortgage the payments are the same as our current mortgage on a rate of about 1.4%. I know we'd incur a fee to leave our current fix but it looks like it could be worth it. Do lenders reduce the fee if you intend to stay with them?

Any words of wisdom?

Thank you

kingstreet

Brookside88 wrote: »

Hi all,

Hoping you clever people can help me with this

We're currently in a 5 year fix with our lender at 2.38% with £103k ish left to repay and 2 years 11 months left on the fix. House was bought for £116k 4 and a half years ago and approx value now is £160k. Payments are £398 a month

We had the house double glazed and a new porch 3 years ago and took out a loan for the cost at £17k. This was put through in my name solely and its causing me some issues obtaining credit as my affordability looks poor. The interest rate on the loan is around 8% with Barclays partner finance on a 25 year term. Payments are £157 a month. (Noted this was not the smartest way to finance)

I'm wondering if it's worth remortgaging mid term as I've just run the figures through money supermarket and with the additional borrowing to roll the loan into the mortgage the payments are the same as our current mortgage on a rate of about 1.4%. I know we'd incur a fee to leave our current fix but it looks like it could be worth it. Do lenders reduce the fee if you intend to stay with them?

Any words of wisdom?

Thank you

You can't do a remortgage with your existing lender. A remortgage is a new mortgage with a new lender to repay the current one. It's doubtful your lender would permit a transfer to a new product unless you can pay any early repayment penalty in cash. They don't like doing this and adding it to the loan.

You could do a further advance, if your lender will permit debt consolidation. This is additional borrowing at a different rate to the present mortgage.

Why not get independent advice on the options open to you?

getmore4less

£120k on £160k is LTV 75% if lucky on the valuation.

What is the rate for extra borrowing with the current lender.

Where are you seeing a rate of 1.4% for 75% LTV
How many years is that(probably 2)
What is the fee?(say £1k min)
What is the ECR.(say 3% min £3k+)

Any other debt that might hinder a remortgage/extension?

Chances* are in 3 years time you will have more debt than you would have if you just stayed with the current situation and tackled the £17k

Why do you need more credit**
Why can't the OH "of we" get what you need

---

* Current situation and amount left in 3years and interest paid
£103k 2.38% £398pm 30y 3m £95,768 £7,106.22

£17,000 over 25years with a £157pm payment is 10.21%
At 8% it would be closer to 16 years

You need to review that agreement if you think it is 8% and 25years

in 3 years you are looking at
£17,000 8.00% £157pm £15,230 £3,882
£17,000 10.21% £157pm £16,482 £5,134

total outstanding say £110,998-£12,250

if you consolidate to 1.4%(if you really can get that rate) paying the same as the mortgage in 3 years time you have

£120k 1.4% £398pm 31years £110,527 £4,848

With £4k+ odd of fees you will have more debt but free up £157pm(£5,600) paid a lot less interest so be net better off if you don't spend it.

Some of that is done by extending both debts out to 31 years and what looks like a 2y fix with fees.

The numbers ERC+fees won't stack up for the mortgage alone it is the £17k at 8%-10% that needs to be sorted.

---

** The need to take such long terms suggests you may be extending your borrowings too far and it may be time to stop borrowing more and focus on reducing the current debt.

I would crunch some numbers based on just refinancing the £17k that will give a £4k head start as there should be much lower fees.
remortgaging will just be borrowing £4k more to fix a problem where you can't borrow more
You cannot borrow your way out of debt.

a trip to debtfreewanabee may be the starting point to find a better solution.

Brookside88

kingstreet wrote: »

You can't do a remortgage with your existing lender. A remortgage is a new mortgage with a new lender to repay the current one. It's doubtful your lender would permit a transfer to a new product unless you can pay any early repayment penalty in cash. They don't like doing this and adding it to the loan.

You could do a further advance, if your lender will permit debt consolidation. This is additional borrowing at a different rate to the present mortgage.

Why not get independent advice on the options open to you?

I've gone through my lenders calculator and it looks like they might do it but won't know for definite without speaking to them directly which I'll do when I can. We dealt with L&C to get the mortgage to begin with so I'll probably speak to them again and see what they say.

Thank you

Brookside88

getmore4less wrote: »

£120k on £160k is LTV 75% if lucky on the valuation.

What is the rate for extra borrowing with the current lender.

Where are you seeing a rate of 1.4% for 75% LTV
First direct and santander both come back as 1.29%
How many years is that(probably 2)
Yep 2
What is the fee?(say £1k min)
£995
What is the ECR.(say 3% min £3k+)
It doesn't say - i'd need to look into it further

Any other debt that might hinder a remortgage/extension?
Yes - credit cards amounting to approx £12k and a loan with £2.5k outstanding. Currently paying this down at £750 a month - reduced by £8k in the last 10 months.

Chances* are in 3 years time you will have more debt than you would have if you just stayed with the current situation and tackled the £17k

Why do you need more credit**
Why can't the OH "of we" get what you need
I don't need more credit - but my affordability to get 0% balance transfers is being hindered by the barclays loan

---

* Current situation and amount left in 3years and interest paid
£103k 2.38% £398pm 30y 3m £95,768 £7,106.22

£17,000 over 25years with a £157pm payment is 10.21%
At 8% it would be closer to 16 years

You need to review that agreement if you think it is 8% and 25years

I've just dug out the last statement which was from July and we took out £16.9k over 15 years (apologies had 25 years in my head) at 7.9% - balance in July was £15.6k. Credit report shows £15.4k remaining as of now

in 3 years you are looking at
£17,000 8.00% £157pm £15,230 £3,882
£17,000 10.21% £157pm £16,482 £5,134

total outstanding say £110,998-£12,250

if you consolidate to 1.4%(if you really can get that rate) paying the same as the mortgage in 3 years time you have

£120k 1.4% £398pm 31years £110,527 £4,848

With £4k+ odd of fees you will have more debt but free up £157pm(£5,600) paid a lot less interest so be net better off if you don't spend it.

Some of that is done by extending both debts out to 31 years and what looks like a 2y fix with fees.

The numbers ERC+fees won't stack up for the mortgage alone it is the £17k at 8%-10% that needs to be sorted.

---

** The need to take such long terms suggests you may be extending your borrowings too far and it may be time to stop borrowing more and focus on reducing the current debt.

This is certainly the end goal - hence wondering if it would work out cheaper to get a lower rate on the mortgage and put the loan in there with it. I'm throwing everything possible towards it at the moment. My bonus last year went straight to it and will do the same this year (approx £3k). I also have a ford kuga which is being repaired by my dad at the moment, once it's fixed I'm selling it (should get £5.5k) which will pay of the loan

I would crunch some numbers based on just refinancing the £17k that will give a £4k head start as there should be much lower fees.
remortgaging will just be borrowing £4k more to fix a problem where you can't borrow more
You cannot borrow your way out of debt.

a trip to debtfreewanabee may be the starting point to find a better solution.

Thanks for your reply - the number crunching bit was particularly helpful as I was struggling to work it all out

getmore4less

It's not just that loan it will be the total debt.

Any of them higher than 7.9%

If they are 0% you seem to be overpaying them rather than the higher rate debt.