Opinions on Mortgage option?

happy_2008

Hi All,

So i am currently looking to upsize moving from a 2 bed to a 3 bed. Below is my current mortgage deal:

Period - 2 Years (Started 12/2019)

Rate - 1.79%

Current Balance - 96,000

In order to upsize i will need to take out a second mortgage with my current provider which means that i will be stuck with them for the near future. There current rates on for 2 years is around 1.79% to 2% for the additional borrowing. At this moment in time i cant decide between taking out a 2nd mortgage with my current provide (ERC applies) or take an another mortgage with HSBC (5 year deal at 1.74%). My ERC charges are 3% on outstanding balance lowering to 2% in Dec 2020.

Just wanted to hear peoples on opinions on which route would be best to take?

grumiofoundation

So ERC of £2880 at 3% (might be able to overpay some without ERC to reduce this).

How big is new mortgage? How much will the new (HSBC) deal save you versus staying on current and remortgaging after 2 years?

Do you particularly want a 5 year deal as well?

happy_2008

My second mortgage will be around £150-170k, ideally 5 year fixed would be best for some sort of security. HSBC are offering 1.74% on a 5 year fixed deal on 60% LTV which seems a good deal

grumiofoundation

So including current mortgage (96k) this would be ~250-270k or does the 150-170k include the 96k?

happy_2008

Including it would be 250-270

grumiofoundation

Maybe a useful way to think of it is that the £2880 ERC charge is roughly an extra 0.2% interest per year on your 5 year deal (so de facto rate of 1.94%). 

Staying with current lender is of course assuming they allow you to port mortgage to new property. 

tigsly

I'm not sure if i'm reading this correctly - but you can only have one mortgage provider (so if you want HSBC mortgage the other part has to belong to them too ) 

happy_2008

tigsly said:

I'm not sure if i'm reading this correctly - but you can only have one mortgage provider (so if you want HSBC mortgage the other part has to belong to them too ) 

Yes my current options are one of the following:

Pay off current mortgage with ERC and apply with HSBC for new mortgage

or

Take out a second mortgage on new property and port old mortgage onto new property

dimbo61

Are you sure about  your current provider imposing ERC,s if you port your existing mortgage and take extra borrowing from them ?
While it's now September 13th and I doubt you can sort a new property in 3 months so less ERC.
I would find the new home first 

happy_2008

dimbo61 said:

Are you sure about  your current provider imposing ERC,s if you port your existing mortgage and take extra borrowing from them ?
While it's now September 13th and I doubt you can sort a new property in 3 months so less ERC.
I would find the new home first 

No the ERC would be on my current balance only, i would expect this to be 2% by the time i found/completed on a property.