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Our property investment expert is Neil Bishop, Head of Residential Mortgages at
Mortgages for Business
www.mortgagesforbusiness.co.uk/
Tel: 0345 345 6788
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Question
Moving house: Need advice on getting a mortgage
I am really worried about what to do about our mortgage. We need to move house for my husband’s job. However, with everything happening at the moment I am deeply worried about the affordability and interest rates on a new mortgage.
My husband’s job is relocating to London and we currently live in the North of England. Prices in and around London are much higher but with three children we cannot compromise on size. Our house has been valued at £270,000 and we have about 60% equity. However, even with £150k to put down on a property in London we fear the repayments will be higher because of rising interest rates.
We are three years into a five-year fixed deal on our current mortgage which is with Santander at rate of 1.99%. Can we move this mortgage to our new property? If not, would it be sensible to sign up to a two-year tracker until things have settled down?
Any advice would be so helpful!
Answer
Firstly, please know this is a fairly common occurrence, even the best laid plans change unexpectedly!
With most lenders, you can port your current fixed product and mortgage balance across to a new property during a fixed-rate period. If additional funds are required, you can take what’s called a Further Advance which would be on a rate from the lender’s current range.
Therefore, part of your mortgage will be on the 1.99% for the remaining fixed term period, and the ‘top-up’ part would be on a current rate for a fixed period that you will choose.
This top-up part could potentially be on a tracker product. When your existing mortgage comes to an end, you can then remortgage and combine the two loans into one new mortgage.
To check whether you can port your existing mortgage, check your original mortgage offer document or speak to your lender directly.
If you cannot port your current mortgage across to a new property, I’d recommend speaking with a broker to look at all your options – including tracker and fixed-rate products.
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Question
Borrowing against my house? Is this possible?
A great opportunity has arisen for me to purchase the field behind our house. I have two horses and this would allow me to keep them close to me, which would be a dream.
I am two years into a five-year mortgage and with rates soaring I am reluctant to remortgage to pay for the field. Is it possible to get a secured loan against my property?
If so, what do I need to do and will it impact my current mortgage deal? Also, when my current mortgage has expired can I consolidate the secured loan into a new mortgage?
Answer
This does sound like an excellent opportunity. There are two ways to raise a secured loan against your property; a ‘further advance’ from your current lender, or a ‘second charge’ loan from a different lender.
As with any residential mortgage, either route will look at the overall loan-to-value, and lending is based on personal affordability.
A further advance is essentially another mortgage with your current lender, which will run alongside your existing mortgage. The further advance will have its own interest rate and could be either a fixed or tracker, depending on the lender’s current product range.
A second charge is an additional mortgage with a different lender to your primary mortgage. When setting this up, your current mortgage provider (that holds the first charge against the property) will need to be informed and agree to have a second-charge loan against your house. The first and second charges refer to who would be paid first in the case of repossession.
You can consolidate the further advance or second charge loan into a new mortgage, but you need to be aware that this will increase the overall loan-to-value of your mortgage, and will typically incur higher mortgage rates.
You will also need to be aware of any early repayment charges on the further advance or second charge loan if you are looking to close this down before the end of any fixed period. I hope that helps.
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Question
Two-year tracker mortgage: What are the risks?
I am due to remortgage March 2023 which is causing me quite a headache and I am now faced with a conundrum.
Currently I am on a five-year fixed rate at 2.5%. When I took out the mortgage my house was worth £450k but I now believe it is valued at nearly £600k (we have done quite a bit of work on it – plus house prices have soared in this area).
I have heard tracker rates are cheaper than fixed rates at the moment. So, would you advise me taking out a tracker for two years, whilst I wait for interest rates to hit their peak and then fall? Or would there be some dangers in doing this?
Answer
You’re certainly not alone in this conundrum! Trackers are currently seeing a surge in popularity due to their attractive rates compared to many of the available fixed rates.
They could be a good route to take at this point due to their lower rates. However, you must be aware that they are tracking an external rate, be it the Bank of England base rate, or the lender’s Standard Variable Rate (SVR). Both of which can go up – potentially quite high.
Looking thoroughly at both options with a broker is the best way to make sure you are making an informed decision.
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Question
How do I find the best deal for first-time buyers?
My partner and I are buying our first home and, as you can imagine, we are quite overwhelmed.
Is there a way we can find out how much we can borrow and also whether there are any first-time buyer schemes to help us?
We have saved a deposit of £45,000 and house prices here in the areas we like are approx. £350k to £400k. Thanks so much.
Answer
Buying your first home is always a big step with many things to consider. I’d really recommend speaking directly with a whole-of-market broker as they will look at all your options and go through which first-time buyer schemes are available.
The broker can also run various affordability calculators to ensure your affordability is maximised.
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