Releasing Money from a Mortgage.
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Cotta
Posts: 3,667 Forumite
Hi All,
Originally posted on the incorrect forum.
A friend of mine has a house valued around 100k for which he paid £80k. At present he has around £40k left on a mortgage of 3.29%.
He wants to increase his mortgage to around £55k and use £9k of the additional mortgage to pay off a loan for which he is paying 9% interest on. He wants to use the final £6k to build up his savings at rates above 3.29%.
I was not sure what to advise as I didn't even feel it would be possible. I am very against the £6k being used for savings as it will be tricky beating the 3.29% interest rate he will be charged on this.
Has anyone any better advice than what I was able to provide? I feel that this is not a wise move on his part.
Originally posted on the incorrect forum.
A friend of mine has a house valued around 100k for which he paid £80k. At present he has around £40k left on a mortgage of 3.29%.
He wants to increase his mortgage to around £55k and use £9k of the additional mortgage to pay off a loan for which he is paying 9% interest on. He wants to use the final £6k to build up his savings at rates above 3.29%.
I was not sure what to advise as I didn't even feel it would be possible. I am very against the £6k being used for savings as it will be tricky beating the 3.29% interest rate he will be charged on this.
Has anyone any better advice than what I was able to provide? I feel that this is not a wise move on his part.
0
Comments
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What makes him think the new mortgage rate will be 3.29%?
A remortgage at 69% LTV is going to have a lower rate and if he chooses an offset product, he can repay his loan and put the £6k in the offset account and pay mortgage interest on only the £49K which is actually outstanding.
If he really does want to increase his current mortgage with his current lender, a further advance/additional borrowing and not a remortgage, the rate may well be more than 3.29%.
Frankly, I couldn't be bothered personally but loads seem to find such distractions satisfying.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
kingstreet wrote: »What makes him think the new mortgage rate will be 3.29%?
A remortgage at 69% LTV is going to have a lower rate and if he chooses an offset product, he can repay his loan and put the £6k in the offset account and pay mortgage interest on only the £49K which is actually outstanding.
If he really does want to increase his current mortgage with his current lender, a further advance/additional borrowing and not a remortgage, the rate may well be more than 3.29%.
Frankly, I couldn't be bothered personally but loads seem to find such distractions satisfying.
Yes I'm not sure of the full logic, I think on his 3.29% mortgage he is able to release some additional funds and still be on the same rate.
I'm really not sure if it's a wise move either but it's something he's looking into.0
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