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Like the rest of the country, I'm thinking about having an extension built sometime enxt year. I had assumed we'd be able to just extend the mortage to give us the cash to pay for it, but having spoken to the bank (First Direct), apparently that's not how it works - we'd have to get a new mortgage/loan, alongside the existing one. There's no particular problem with this, but I'd much rather just have one debt we can concentrate one rather than two, and two sets of payments each month etc.
I'd be interested to know what others have done for this sort of project. We could just pay for it out of savings, but seeing that the S&S ISA is getting about 12+% at the moment and the mortage is less than 2%, it seems daft to use savings. Our mortgage fixed period is up for renewal at the end of next year, so I am wondering if it'd be possible to combine it with the new loan when we renegotiate.
I’d much rather just have one debt we can concentrate one rather than two, and two sets of payments each month etc.
Its not like that, or it wasnt for us: its 1 mortgage account with 2 mortgages on different terms and one payment. Only thing we didnt like was that you couldnt pick which mortgage pot you were making overpayemnts to as obviously it would have been preferable to make overpayments to the mortgage with the higher interest.
Unless you're locked in on a fixed period or the like, you could just move to a new mortgage provide and have 1 new mortgage all at the same terms
If you get it extended enough then there might be a career in "art house" cinema?
Same here, when I queried why we couldn't do one new mortgage with all the bits rolled in, they said it's better for you as the different mortgages/ advances etc then had different rates so you should benefit.. Either way it was no bother, just means we have 3 or 4 smaller mortgages on one account, covering old house, additional when we moved and extension.
We just moved it all to the same one on a better rate as house value had gone up, when we remortgaged a year later.
We've also done the second mortgage thing. It's no different in practice to having 1 mortgage. It shouldn't change your plans at all.
I'd be far more worried about finding a builder and the builder being able to source the materials. I've heard some horror stories.
Yep builders around here fully booked for the next year at least.
You probably could get down to one mortgage if you really wanted to - we are considering a move at the moment but have 2 years of a fixed rate mortgage left to go. If we move we can either
a) Transfer the existing mortgage and take out another for the additional borrowing,
b) Settle the existing mortgage now and take a single mortgage for the total amount we want to borrow. This would incur an early redemption fee of 3% of the outstanding mortgage
c) Wait til the end of the fixed rate, take out a new mortgage
I think if you do it mid term, you'll pay a new product fee. If you do it during your scheduled remortgage, it can be done under one fee but might still be a separate pot. We actually did this on purpose, we have the majority on cheaper deal but a portion is on a product that is a shade more expensive but doesn't cap any over payments we want to make