Split mortgage - big & little parts

trudi_bear

Our mortgage is in two parts:

• One brought over from our previous property, on a fixed rate of 2.15% until Jan 2024 - the smaller part
• A much larger mortgage (5x the amount) on a fixed rate of 1.64% until Jan 2025

We're now at the point where we are having to renew the smaller mortgage - on much higher rates of interest of course. My first question is - can we have two mortgages with 2 different providers? Or do we have to go with our existing provider for our smaller mortgage?

I think the answer to this is no, we can't have 2 mortgages with different providers. If that is the case, what is the best option? We have been offered a fix at 5.64% for three years, or a tracker at 0.89% above the base rate as options on our smaller mortgage. I am tempted to opt for the 3 year fixed, and then renew the big one (when it comes up a year later) for 2 years - then the two mortgages can be combined and we'll be in a better negotiating position on the whole lot (and can move lender). Rates also might have dropped a bit by January 2025 (when the big mortgage is due for renewal) so 2 year fixed might be OK.

My husband thinks we should stick with our original plan and go on a tracker for a year on the small mortgage - giving us more flexibility when the bigger one comes up for renewal in 2025 (as it will mean we can switch lender). My concern is that with interest rates looking like they're continuing to rise, this could be risky even on the smaller mortgage - for the next year.

What would you do?

Thank you if you got to the end of this post!

CSI_Yorkshire

Very few lenders are willing to be the second charge on a property (which is what you would be asking them to accept if you had two mortgages with different lenders).

silvercar

I would be looking to merge them as soon as you can, in order to have a wide choice of lenders. What you save in the long run will outweigh anything extra at the moment.

MWT

trudi_bear said:

My husband thinks we should stick with our original plan and go on a tracker for a year on the small mortgage - giving us more flexibility when the bigger one comes up for renewal in 2025 (as it will mean we can switch lender).

I would agree with your husband, 12 months on a tracker will get the parts aligned and you'll be free to remortgage as a whole if you want to...

dwsjarcmcd

It would depend on the terms of the Tracker mortgage and whether there were ERC's to exit it.  If there are ERC's, I would go on your Lender's SVR for a year and then combine the accounts to give you the maximum flexibility/options then.  Obviously, if the Tracker doesn't have ERC's and is cheaper than SVR, I'd go with that.

My priority would be to combine the accounts as soon as possible.

kingstreet

Which lender, please?

trudi_bear

kingstreet said:

Which lender, please?

Hi - HSBC.