How to release equity on mortgage when have lots of it :-S small mortgage and after options

No19v87

The problem is you are asking for advice and then ignoring what people are saying to you. You won’t learn anything that way.

You have earned nothing. The additional equity in your house can only be released in ways such as:
1. Selling your house
2. Increasing your mortgage
3. Equity release scheme

None of the above options would make any sense whatsoever when you have money you can use in savings to purchase the caravan. Or, if you’re that desperate for it now, use a finance option if a 0% exists on a caravan purchase?

Overpaying the mortgage makes sense, but it doesn’t if you are then going to borrow an additional £30k at a higher interest rate.

Hoenir

welshlad46 said:

The mortgage is with Virgin.. aint got a massive amount of years left i think 17-18.. 

Liknk to Viirgin website. 

https://uk.virginmoney.com/mortgages/existing-customers/additional-borrowing/secured-loan

Our current residential additional borrowing loan rate is our Standard Variable Rate (SVR) less 2.5%.

Virgin SVR is currently 6.75%. Which gives an effective borrowing rate of 4.25% (ignoring any arrangement / legal fees). 

Over 5 years that would cost about £556 per month. Over 10years  £307 per month. . 

welshlad46

Ok thanks for comments (wish i hadnt asked now as like i said i did not understand how it worked..) but yeah ok il drive on and keep saving for a caravan or hope i win lotto i guess😬

Yorkie1

welshlad46 said:

So il try and keep it as short as possible.. house purchased for £102,000 now worth potentially over £200,000 based on houses in area (ours probably worth more).. have current rate locked in until January 2027 at 1.78% (I know very very lucky) so I have been paying £200 a month in to savings to overpay the mortgage and I am hoping to max out that 10% overpayment limit come 2027 remortgage time.. but my question is this.. with 100k equity pot sat there doing nothing and we have no intentions on moving.. but we would love to purchase a caravan/campervan.. is there anyway this equity could be used for this? We dont need the money for anything on the house really as we saved to have the bathroom done two years ago and we do try and save as much money as possibe but would love to buy a caranavan/camper for us to enjoy as a family as my daughter loves a caravan 🤣Obviously i understand and appreciate that our mortgage rate is great to have and we wouldn’t want to change that until it is due but any ideas on this would be appreciated 

Just clarifying as it's a little confusing:
Do you have a mortgage at about 1.78% for about £100K?
And savings of about £100K at 4.3% interest?
And intend to pay just 10% overpayment when you remortgage in 2 years' time?
So you would have £90K left in savings?

So you could use some of that £90K savings to buy a campervan?

The increase in house value isn't relevant at the moment - it will become relevant if you change mortgage provider or change mortgage product, as they will value the house to decide what % the outstanding mortgage loan is in relation to the value of the house (i.e. the LTV or loan to value). Once you reach 60% LTV or less, the mortgage rates tend to stay the same.

Flugelhorn

Yorkie1 said:

welshlad46 said:

So il try and keep it as short as possible.. house purchased for £102,000 now worth potentially over £200,000 based on houses in area (ours probably worth more).. have current rate locked in until January 2027 at 1.78% (I know very very lucky) so I have been paying £200 a month in to savings to overpay the mortgage and I am hoping to max out that 10% overpayment limit come 2027 remortgage time.. but my question is this.. with 100k equity pot sat there doing nothing and we have no intentions on moving.. but we would love to purchase a caravan/campervan.. is there anyway this equity could be used for this? We dont need the money for anything on the house really as we saved to have the bathroom done two years ago and we do try and save as much money as possibe but would love to buy a caranavan/camper for us to enjoy as a family as my daughter loves a caravan 🤣Obviously i understand and appreciate that our mortgage rate is great to have and we wouldn’t want to change that until it is due but any ideas on this would be appreciated 

Just clarifying as it's a little confusing:
Do you have a mortgage at about 1.78% for about £100K?
And savings of about £100K at 4.3% interest?
And intend to pay just 10% overpayment when you remortgage in 2 years' time?
So you would have £90K left in savings?

So you could use some of that £90K savings to buy a campervan?

The increase in house value isn't relevant at the moment - it will become relevant if you change mortgage provider or change mortgage product, as they will value the house to decide what % the outstanding mortgage loan is in relation to the value of the house (i.e. the LTV or loan to value). Once you reach 60% LTV or less, the mortgage rates tend to stay the same.

no the 100K is not savings it is equity in the property 

silvercar

The sort of mortgage you want is an offset mortgage. You only pay interest on the outstanding balance and can dip into the mortgage if you want textural cash. Eg a mortgage of £300k, you keep as much as you can in the mortgage pot, say 100k. You pay interest on the outstanding balance, so 200k in this case. 

Then you take out £30k for your caravan or whatever, leaving you with 70k in the pot, so you pay interest on 230k. You can pay in more whenever you want and take out what you need up to the agreed max mortgage amount. 

welshlad46

Yorkie1 said:

welshlad46 said:

So il try and keep it as short as possible.. house purchased for £102,000 now worth potentially over £200,000 based on houses in area (ours probably worth more).. have current rate locked in until January 2027 at 1.78% (I know very very lucky) so I have been paying £200 a month in to savings to overpay the mortgage and I am hoping to max out that 10% overpayment limit come 2027 remortgage time.. but my question is this.. with 100k equity pot sat there doing nothing and we have no intentions on moving.. but we would love to purchase a caravan/campervan.. is there anyway this equity could be used for this? We dont need the money for anything on the house really as we saved to have the bathroom done two years ago and we do try and save as much money as possibe but would love to buy a caranavan/camper for us to enjoy as a family as my daughter loves a caravan 🤣Obviously i understand and appreciate that our mortgage rate is great to have and we wouldn’t want to change that until it is due but any ideas on this would be appreciated 

Just clarifying as it's a little confusing:
Do you have a mortgage at about 1.78% for about £100K?
And savings of about £100K at 4.3% interest?
And intend to pay just 10% overpayment when you remortgage in 2 years' time?
So you would have £90K left in savings?

So you could use some of that £90K savings to buy a campervan?

The increase in house value isn't relevant at the moment - it will become relevant if you change mortgage provider or change mortgage product, as they will value the house to decide what % the outstanding mortgage loan is in relation to the value of the house (i.e. the LTV or loan to value). Once you reach 60% LTV or less, the mortgage rates tend to stay the same.

Sorry for confusion.. so the 1.78% is on about £76,000 left owed on it.. it runs at thst rate until January 2027 and ive been paying £200 a month to a savings account to over pay it off mortgage as seems a no brainer at the rate i currently have.. and i figured that when i do come to remortgage if the rates are still where they are now (doubt they will ever go as low as they have done).. at least id be ready for the added cost on payments by that time.. i am also hoping by paying that overpayment amount that it should massively reduce the time left/what is left to pay on the house

Flugelhorn

I liked my offset mortgage, didn't borrow any extra but was able to keep money in it from self employed work until it was time to sent it to HMRC, meant the outstanding balance went down much more quickly.  Gather some people can get very tempted by the available cash and end up owing a lot more than they intended 

zagfles

The problem is there's so much drivel in the media and "property p0rn" type TV shows that implies rising house prices are something great that makes homeowners money, so people wonder how they can spend that money. 

Of course it's rubbish, something that you own rising in price is good, something that you need rising in price is bad, and something you both own and need rising in price is neutral, and doesn't help you except in fairly trivial ways like it enables you to borrow more at a lower rate.