New lender or second mortgage??

gecko_alp

Hi,
Hoping somebody might have some advice. Our current mortgage deal has come to an end - we are now looking for a new deal (decided on a 2 year fixed), but we would like to borrow an additional £60,000 for improvements to the house. We have a low LTV and affordability wise, we haven’t got a problem with the additional amount.

Our existing mortgage is with Nationwide. They have advised me to take out a new deal for the existing mortgage, and to take out a second mortgage for the additional £60k. This seemed fine, but I am now faced with either two product fees of £999, or one product fee for the new mortgage, and a higher rate (1.64 vs1.24) on the existing amount to avoid the fee.

I can’t get my head round how this makes sense for us?? Surely I have no incentive to stay with Nationwide, and would instead be better getting a single mortgage for the total amount with a new lender?? I have spent the last couple of weeks trying to get a straight answer with Nationwide, and now I’m just totally confused!!! Any advice would be appreciated!!

Thrugelmir

Remortgaging to a new lender will come with additional costs, i.e. exit fee, legal fees and valuation fees. Plus potentially a product fee.  Product fees themselves become disportionate as the amount borrowed reduces. Likewise the shortened term of 2 years. Any particular reason for a 2 year fix? 
What fee free rates are the Nationwide offering? 

ACG

When I worked for a lender and this type of thing cropped up, we would usually waive one of the £999 fees, I am not sure why nationwide would not do something similar if they can not do the whole thing in one go. I agree, if they can not do it then it probably makes sense to shop around. It probably makes sense to shop around anyway, but more so if they insist on the 2 fees. 

gecko_alp

Thrugelmir said:

Remortgaging to a new lender will come with additional costs, i.e. exit fee, legal fees and valuation fees. Plus potentially a product fee.  Product fees themselves become disportionate as the amount borrowed reduces. Likewise the shortened term of 2 years. Any particular reason for a 2 year fix? 
What fee free rates are the Nationwide offering? 

Thanks so much for the advice - I hadn’t thought about incurring valuation, legal costs etc. 

Fee free with nationwide is 1.64%, or it’s 1.24% with fee. Two year fixed decision was based on the possibility of a move (relocation) in the not too distant future...however I would consider alternative as even with a move, we wouldn’t be looking to borrow any more.

gecko_alp

ACG said:

When I worked for a lender and this type of thing cropped up, we would usually waive one of the £999 fees, I am not sure why nationwide would not do something similar if they can not do the whole thing in one go. I agree, if they can not do it then it probably makes sense to shop around. It probably makes sense to shop around anyway, but more so if they insist on the 2 fees. 

Thank you, this is what I thought, and what the people in branch have suggested. However, their online people seemed to contradict this. I have an appointment booked in branch now, so hopefully they’ll be able to offer a bit more clarity. I just don’t want the hassle of the appointment, if they’re going to tell me the same thing. Thanks again!

ACG

Many remortgages include free valuation and standard legals, but the exit fee (around £80-100) would still be chargeable.