Advice greatly needed

berna_pete

Hi folks, this is my first post so please bear with me.

Currently hubby and I have a 3 year fixed rate mortgage with LLoyds TSB that runs out in September 2009 (19 years remaining, mortgage £61,000 and valued at £125,000). Unfortunately our central heating has packed in and the house needs rewired and we don't have the savings to fund this.

We are unsure what to do. If we terminate the mortgage early we incourr £1200 early payment fee. Ideally we would like to top-up our mortgage to fund this and also get a new kitchen at the same time. Would we be able to do this do you think or is it very unlikely as we still have a year left. If unlikely could you give us any other suggestions as what to do. Hubby is going to phone LLoyds TSB tomorrow but it is really so that he is prepared before he speaks to them as we are both very naive about mortgages in general and don't want to be taken for a ride.
Thanks B

Tiddler_2

Hi,

You have 2 options.

1. Borrow the money through Lloyds TSB - this is usually called a further advance. Many lenders will do this under your same mortgage account number or by adding an additional section to your mortgage. This won't affect your current fixed rate deal. However as you only have 1 year left to go on your fixed rate, I personally would not put the additional money on a fixed rate deal as this may tie you to Lloyds TSB for longer than next September. You either want to have the new monies on the standard variable rate, or a penalty free tracker.

This would then give you the freedom to review the whole mortgage a couple of months before the deal finishes in September 2009.


Option 2 is a secured loan (or 2nd mortgage) rates tend to be a little bit higher on these, but they can be useful if your lender won't offer a further advance and you're on a good rate on your main mortgage, or you have penalties if you pay off the mortgage. Don't be tempted by their own Payment Protection Insurances though, if you want this cover shop around for it.

If you take the secured loan option you can combine the mortgage & loan next year when your current mortgage deal ends (assuming the credit crunch doesn't restrict mortgage lending further, and you house value does not fall significantly)