Help with remortgaging a right to buy property

PharmT

Hi there,

We purchased our RTB property from the council in March 2022 on a 2yr fixed term of 4.4% with Kensington, due to historic adverse, but we are climbing nicely now.

I have a few questions?

1. When we remortgage, do we need another RTB product/friendly lender, with us being within the 5yr discount payback period? Or can we go anywhere?

2. We would pay approx £2k if we remortgaged early in ERC's, but with the interest rates rising, would it be wise to start looking earlier?

3. We have a second charge on our property, could this be incorporated on the remortgage, as each year passes in theory we retain the rights to 20% of the discount every year.

Thanks so much, terrified of getting this decision wrong

K_S

@PharmT

1. Yes you'll need an RTB product.

2. Most mainstream mortgage offers are valid for 6 months, so you should start looking around 6 months before the end of your Kensington fix.

3. Do you mean a second charge loan secured against the property? I didn't know that was possible for RTB properties. If you have a second charge loan I don't think it'll be straightforward to add it to your remortgage as with RTB a capital raise requires the permission of the council and is allowed only for a very few reasons.

PharmT said:

Hi there,

We purchased our RTB property from the council in March 2022 on a 2yr fixed term of 4.4% with Kensington, due to historic adverse, but we are climbing nicely now.

I have a few questions?

1. When we remortgage, do we need another RTB product/friendly lender, with us being within the 5yr discount payback period? Or can we go anywhere?

2. We would pay approx £2k if we remortgaged early in ERC's, but with the interest rates rising, would it be wise to start looking earlier?

3. We have a second charge on our property, could this be incorporated on the remortgage, as each year passes in theory we retain the rights to 20% of the discount every year.

Thanks so much, terrified of getting this decision wrong

PharmT

Yes, a second charge secured against the property through 'Tandem'......we applied and were accepted I didn't realise it could potentially be an issue....eek!

PharmT

I am aware about being able to seek a new product 6 months before, but what do you think will happen with interest rates.....might it be a better option not to wait, to pay the ERC, and remortgage early?

K_S

@pharmt Your opinion is as good as mine. I didn't expect interest rates to go as low as they did, or stay low for as long as they did. Similarly I didn't expect that rates would get to the current level so rapidly. 

Whether you wait or you pay ERC and switch, only time will tell which if those was the better option from a numbers point of view.

PharmT said:

I am aware about being able to seek a new product 6 months before, but what do you think will happen with interest rates.....might it be a better option not to wait, to pay the ERC, and remortgage early?