How does borrowing against mortgage work?

AlexaSpoon

We want to extend our home and will need to borrow against our mortgage. Total novice here and no idea how it works.

We currently have an amazing mortgage rate (1.4%) as we fixed just before all the increases. Would we have to get a new mortgage deal, i.e. lose our amazing interest rate and pay a much higher interest rate?

Our house is now worth almost double what we paid for it in 2013, does that stand us in good stead? Or does it make no difference unless we sell it and go off-grid? 

This is our first house so we've no experience of selling or remortgaging. It has plenty of scope to extend hence we'll just stay put.

Thanks in advance 🙏

amnblog

You borrow extra on your mortgage. You will have a new loan running concurrently with your existing loan. You will keep you 1.4% rate on what you have.

You end up with one mortgage with two loan elements (one your original borrowing, one your new borrowing) and one direct debit.

AlexaSpoon

amnblog said:

You borrow extra on your mortgage. You will have a new loan running concurrently with your existing loan. You will keep you 1.4% rate on what you have.

You end up with one mortgage with two loan elements (one your original borrowing, one your new borrowing) and one direct debit.

Thanks. When the mortgage is up for renewal do.you think it would make sense to remortgage to release some equity to pay for the extension? Or is that not how it works?

Typhoon2000

You would only remortgage to a different lender to get a better rate. If your existing lender is working out cheaper, why move. You don’t have to change lenders to borrow more or wait for your fix to end before borrowing more ( no ERC if you borrow more from the same lender).

fatbelly

Or if you want to be safer, get a personal loan rather than secure more debt against your house

https://www.moneysavingexpert.com/loans/