Help me understand remortgage/ additional borrowing

caut_1

Hello everyone

I am trying to get my head around the possibility of remortgage/additional borrowing.  

Our current deal is up in a few months and I was hoping to borrow some extra to consolidate some debts.  Mortgage amount outstanding is 150,000 and I would be looking at borrowing an extra 25,000.

Having looked online it seems as the way to do it is to apply for the mortgage (150,000) and then the additional borrowing separately.

However can I just apply for a new Mortgage of 175,000 instead and then when the finance comes in transfer the 150k to the previous mortgage supplier and that will leave 25k to pay the debt ?

Thank you everyone in advance

Mark_d

Yes getting a mortgage for £175k sounds like a good way to go about it. When you speak to speak to your broker, you'll need to tell them how much ins outstanding on your current mortgage and you can tell them that you'd like to borrow an extra £25k.

Isthisforreal99

You will of course need to have sufficient equity to borrow an additional £25k, how much is the property worth?

Increased borrowing may increase your LTV so may mean the rate offerred will be higher.

Brie

Please think very hard about this idea.

If you were to post on the debtfree wannabee board everyone will say that putting your debt onto your mortgage is a really bad idea.  What it does is take unsecured debt and make it secured.  What's worse is that if you haven't addressed the issue of what created the debts then you will simply end up with a bigger mortgage and more debts that you can't afford.  Net result could be that a few years down the line you lose your home because you can't afford to keep up with all the payments.  

If you want help with your debts pop over to the debtfree wannabee board.  You should fill out a statement of accounts (see link in my signature below) accurately using at least 3 months bank statements and bills and then post it on the board so the friendly people there can offer suggestions on how to get things back on track in an affordable manner.   

kingstreet

If you stay with your existing lender and take a customer retention product you would apply for additional borrowing separately.

If remortgaging to a new lender, you borrow all you need to repay the existing mortgage and cover your other needs. At completion, a solicitor will repay the existing mortgage, forward the residual funds to you, remove the existing lender's charge over your home and register the new one.

eschaton

Brie said:

Please think very hard about this idea.

If you were to post on the debtfree wannabee board everyone will say that putting your debt onto your mortgage is a really bad idea.  What it does is take unsecured debt and make it secured.  What's worse is that if you haven't addressed the issue of what created the debts then you will simply end up with a bigger mortgage and more debts that you can't afford.  Net result could be that a few years down the line you lose your home because you can't afford to keep up with all the payments.  

If you want help with your debts pop over to the debtfree wannabee board.  You should fill out a statement of accounts (see link in my signature below) accurately using at least 3 months bank statements and bills and then post it on the board so the friendly people there can offer suggestions on how to get things back on track in an affordable manner.   

That’s the best advice. You need to solve the problem before trying to fix it. 

Before going ahead with this I’d advise calculating how much this will cost you over your intended repayment term. You might be surprised. 

Back in the early 2000’s when house prices were increasing, people were taking equity at a remortgage for things like a new car as if it was free money. They were expensive cars when paid off years down the line. 

When I sold my first house 20 years ago, I had £42k equity for my current home. Cash was a bit tight for a few months as I’d bought two new cars in the previous 9 months, the most expensive of them had been delivered over a year early. 

I’d probably have got through without it but thought I’d just take £2k from the equity as a bit of a bonus. 

It was only during my rapid mortgage free journey last year that I calculated what that £2k had cost me. Even with years of low rates as I was on a BR tracker, I was still surprised by the final cost. 

In hindsight I wish I hadn’t taken it.