Must an additional mortgage come from my existing lender

Sardlife

Hello all,

I am currently nearing the end of a 7 year tie in with the Abbey (Finishes in August 2006) and intend, as soon as I am able, to re-mortgage elsewhere.

However, in the mean time I would like to raise additional capital against the equity in my house, this is probably a stupid question but, can I take out a mortage with another lender on the same property as my existing mortgage with the Abbey?

The figures:

Current mortgage is, loan 1 £70395.00 with the Abbey repayment mortgage costing £538.00 per month (excluding insurances) Tied until August 2006.
Loan 2 £16605.00 with the Abbey repayment mortgage costing £170.00 per month (excluding insurances) No tie in.

Term of both loans is 19 years.

Property value is £220'000.00.

Income is £50'000.00 per annum

I want to raise an additional £47'500.00.

I realise that the mortgage company holds the deeds for my house but is there any way of splitting the value/equity between two lenders?

I think I know the answer but it has to be worth asking.

Thanks for looking.

dwsjarcmcd

Sardlife,
Sorry but I don't think you will be able to do this. You do have a couple of options to raise the additional finance
1. 2nd mortgage but you will pay for this as the lender with the 2nd charge doesn't have the same security.
2. Check out the ERC's with the Abbey. Depending on the length of the original product it may be worth paying these and remortgaging. This could be even more applicable because often additional loans are either on SVR or on less favourable terms as the main loan.
I think you should explore the 2nd option and get your calculator out!

Sardlife

dwsjarcmcm,
Unfortunately my friends (!@**!) at the Abbey have me fairly well tied up!
It will cost me circa £6k to get out, just not worth it with such a short time to run.
It's a shame that I need to raise the extra cash now and not in 8 months.
Perhaps I'll just have to wait!
Thanks for your thoughts.

dwsjarcmcd

Sardlife,
In which case I would do an additional loan with the Abbey (ensuring there are no ERC's) and remortgage away in 8 months.........but I guess you knew that!

MarkyMarkD

I did the same with YBS ... I took a further loan because I was tied in, and then remortgaged the whole lot around 8 months later. Easy enough - and not that bad on the additional borrowing.

Most lenders will let you have some sort of good deal on the additional borrowing if you are borrowing a large amount e.g. £50k - YBS certainly would.