Combining two mortgages

plymothian

Hi, 

I'm looking for some advice about my mortgage. I plan to speak to an advisor in March/April but wondered if anyone had any suggestions for now. 

My house is worth around 300k and I have a two part mortgage. 

Mortgage product 1 is roughly £78k with a mortgage rate of 1.49%, this rate ends on 2nd September 2025. Mortgage product 2 is £67k with a mortgage rate of 1.89% which ends on 2nd April 2026. When September comes am I better off going on to the SVR for part 1 until April, then combining the two in April 2026. Or should I pay the early repayment fee for part 2, which is around £3700 and combine them in September (note, I don't have a spare £3700 so not sure how I'd actually manage that). Or something else?

I'm already nervous about how much more expensive mortgage rates are going to be. Ideally we wanted to take some money out for renovations but I think that's looking unlikely. If you were me, what would you do?

Thanks 

lfc321

Why do you need to combine them?  That would only be necessary if you planned to move lender. With a relatively small overall mortgage, you would need to find a very significantly better rate with another lender to make it worth either paying the ERC or spending several months on the SVR.

Some lenders will let you take a new deal up to 6 months early, so if you do have a good reason to need to get the dates in line, that would be a possible option to reduce the amount of time you would have to spend on the SVR with product one.

Whatever you do, you are right that rates are likely to be quite a bit higher than your current one. 

plymothian

To be honest, i'm not entirely sure... I just thought it was the 'done thing'. Are you able to take money out to do renovations if you have two separate mortgages? Thanks for your help, as you can probably tell...I am clueless!

lfc321

Yes - there's no reason you can't take out further lending and have three sub-accounts. (Of course, assuming you pass affordability etc - the lender will check all of that).

lfc321

PS you asked in your original post what we would do.

I am not in a position to give you financial advice, but I can tell you what I'm planning to do myself in a similar situation to you:

I currently have three sub-accounts, all with different end dates this year (Feb, July and Sept). I'm planning to take out a new product with my existing lender on each as they end. No other lenders are currently offering significantly lower rates than my existing one, so there's no reason to move lender. And, of course, I'm hoping that rates might come down a little bit through the year so that I might be able to get slightly lower rates on the sub-accounts ending in July and September. But who knows whether that will pan out or not.

The one thing I will probably do is take out the same length of fix on each (either 2 or 3 years - not sure yet). That will at least keep their end dates relatively close in case there is an advantage in moving lender next time I come to renew.

Hoenir

Why not let the two seperate loans continue to run. Incurring ERC's and moving to a higher rates of interest are in no way beneficial. You may be shocked to learn what you lender's SVR is. 

plymothian

lfc321 said:

PS you asked in your original post what we would do.

I am not in a position to give you financial advice, but I can tell you what I'm planning to do myself in a similar situation to you:

I currently have three sub-accounts, all with different end dates this year (Feb, July and Sept). I'm planning to take out a new product with my existing lender on each as they end. No other lenders are currently offering significantly lower rates than my existing one, so there's no reason to move lender. And, of course, I'm hoping that rates might come down a little bit through the year so that I might be able to get slightly lower rates on the sub-accounts ending in July and September. But who knows whether that will pan out or not.

The one thing I will probably do is take out the same length of fix on each (either 2 or 3 years - not sure yet). That will at least keep their end dates relatively close in case there is an advantage in moving lender next time I come to renew.

Thank you so much. I'm not sure why I never even considered continuing to keep them separate, and the fact that you can have three products is really interesting!