Confused

misst1968

I currently have a £57,000 endowment mortgage with the Alliance & Leicester but I want to convert it to a repayment plus raise an extra £13,000 for home improvements and the like (the property is worth £150k). I have asked A&L if I do this by remortgaging for £70k but they state that I can only raise the extra capital by taking out a further loan which would be secured on the property. Is there a reason for doing it this way? Would A&L make more money from me by having two loans on the property? If I went to a different lender and remortgaged, then surely I could do it for £70k?

Taking out a remortgage for £70k seems more straightforward to me or am I missing something?

lisyloo

I think it's simply a case of processes and procedures.

The correct term for a "remortgage" with your own lender is a "switch".
If they lend you the same amount of money then there is no additional risk to them (they are already lending it), therefore they will not need to check out the house or yourself (to see if you are good for the loan).

If you want more money then they have to check the house (with a survey) plus potentially yourself (with a credit check).
Therefore you have to take the additional loan so that they can do this.
A switch (without these checks) is restricted to the same amount.

If you go to another lender then you will find that they too will want to do a survey on the house and a credit check on yourself.

I don't think A&L are being unreasonable.
After all you are asking them to take more risk (albeit not a huge amount).

misst1968

Thanks for your reply but I think I should have added some more details on my original post. I am currently on SVR with no penalties so I could switch the £57k to a two year fix at 4.24%. If I take out the additional £13k as a secured loan on the property, this would be at SVR which is almost 7%. However, if I could remortgage for £70k, I presume the whole loan would be at 4.24%. I presume that the latter would be available to me had I switched from another lender but not if I am an existing customer.

Any thoughts would be greatly appreciated.