Can I get I borrow more on my mortgage but still keep the 50% LTV interest rate?

tom131313

Hi, I hope someone may know the answer to this one. 

We have a mortgage on a fixed rate due to expire in August. The loan to value is around 50% so we benefit from a better interest rate than a higher LTV rate. In about a year’s time we plan to extend the house, so will want to borrow some more on the mortgage. If we fix again in August (for 2 years) based on a 50% LTV but then apply to borrow a further amount next year, will we be penalised for the fact that we will then have a higher LTV overall? Would we be better off just borrowing all of the money now rather than next year, even if it’s not needed until next year? 

Edi81

You will be charged at the rate for the new ltv on the new borrowing. The bank is taking more risk so will charge you accordingly. 

Depending on lender and new LTV it could be the same - the numbers come into play. 

K_S

tom131313 said:

Hi, I hope someone may know the answer to this one. 

We have a mortgage on a fixed rate due to expire in August. The loan to value is around 50% so we benefit from a better interest rate than a higher LTV rate. In about a year’s time we plan to extend the house, so will want to borrow some more on the mortgage. If we fix again in August (for 2 years) based on a 50% LTV but then apply to borrow a further amount next year, will we be penalised for the fact that we will then have a higher LTV overall? Would we be better off just borrowing all of the money now rather than next year, even if it’s not needed until next year? 

@tom131313 The additional borrowing will be at the overall LTV so if you were currently at 50% LTV and the additional borrowing took you to 75% LTV then the new (smaller) mortgage would be at a 75% LTV rate.

Whether it's better to borrow extra now and plonk it in a savings account vs additional borrowing in a years time, will depend on how much you are looking to borrow and what interest-rates will be in a year's time so hard to predict.

It's important to remember that for a lot of mainstream lenders, LTV bands only start at 60% / 65% / 70% and even 75% in some cases so depending on how much you are borrowing, it may effectively still be in the same LTV band.