Active discussions

Meet the Other Phone. A phone that grows with your child.

Meet the Other Phone.
A phone that grows with your child.

Buy now

Please or to access all these features

Talk
Chat

Join the discussion and chat with other Mumsnetters about everyday life, relationships and parenting.

Original poster

How do you remortgage to raise ££?

29 replies

Mudmudingloriousmud · 03/02/2021 08:20

Can anyone explain it to me?
May have to put one dc into private school for secondary, and or we could really do with a new kitchen.
However do people remortgage to raise money?.
Eg our current rate is I think some where around 2.39% so I guess we maybe able to get a lower rate...

OP posts:
Snookie00 · 03/02/2021 08:28

School fees and a new kitchen are pretty expensive. You appear to be wanting to raise at least £80k to pay for that. How much equity do you have in the house, how much is the house worth and can you afford to service that kind of extra debt on top of your existing outgoings? There is also the questions of what period you’d like to borrow the money over and what you’d do if mortgage rates increased as they no doubt will over the next 10-20 years.

But it basically comes down to affordability. You’ll be able to raise it if a bank thinks you can pay them back.

Original poster
Mudmudingloriousmud · 03/02/2021 08:37

I'm literally thinking out aloud so I've not worked out fees yet.
Rather than a house move it would be cheaper to do kitchen...

We have a lot of equity in the house. Obviously we are on the home straight with the mortgage and currently slightly over pay.

OP posts:
Original poster
Mudmudingloriousmud · 03/02/2021 08:37

But how do we get that 80 grand extra, I mean do we say to mortgage people we are raising money?

OP posts:

Interested in this thread?

Then you might like threads about these subjects:

General education General money
MiaowMiaow99 · 03/02/2021 08:39

Extra borrowing added to a mortgage can be very expensive. Even though the rate may be lower than a traditional loan, and monthly payments low too, the total repaid can be mind blowing. Make sure you understand the total amount you will repay so you make an informed decision.

ramblingsonthego · 03/02/2021 08:40

Your house is worth 400k, you have a 200k mortgage outstanding. You approach a lender and ask for a mortgage for 280k. They will do affordability checks etc.......

MiaowMiaow99 · 03/02/2021 08:40

Yes, you tell them what you plan to use the money for, they re assess the risk, affordability etc.

Happytentoes · 03/02/2021 08:42

Well as pp said, it’s basically equity release. So you need a valuation and an understanding of what you will be able to borrow.
Then you shop for the best rate.
Alternatively you can ask your current lender to add a loan of £80k to your current mortgage - you may need to change the time line too.
But you end up with a larger mortgage, so may move off the home straight as you put it.

dementedpixie · 03/02/2021 08:42

You basically ask for a bigger mortgage and do another mortgage application for a larger amount than you currently have. This frees up equity from your house to create spending money

Snookie00 · 03/02/2021 08:47

We don’t know how much you earn, how much your current outgoings are, what time period you want to borrow the money over, how much equity you have, how much your current house is worth. All these are factors that the mortgage lender will consider when deciding if you’re a good bet to lend to.

Original poster
Mudmudingloriousmud · 03/02/2021 10:31

Thanks Snookie, I understand that posters on MN cant tell me if I will be able to raise the money - its the technical side I was confused about...

ie do we say its for school fees? Or building, have people done this?

OP posts:
Original poster
Mudmudingloriousmud · 03/02/2021 10:59

If people do not use this as a way to raise funds eg for school fees, how else would they do it?

( my dd has sen hence why I am thinking of paying as I know the local schools are not able to cope with sen)

OP posts:
NotDavidTennant · 03/02/2021 11:06

You just take out a new mortgage that is larger than your old one. When you pay off the old one any excess money comes to you.

Thatwentbadly · 03/02/2021 11:09

Most people pay for school fees out of earnings? How old is your child? School fees plus clothes, school meals, equipment and trips may cost £20k a year- is that something you are going to be able to pay every year until they finish A levels.

Original poster
Mudmudingloriousmud · 03/02/2021 11:24

That I am thinking out loud at the moment I do not know - because we wouldn't pay out of earning, ie its not a life style choice it MAY be a necessity ..

this is what confused me though, why would the bank allow anyone to increase their loan ?

OP posts:
Original poster
Mudmudingloriousmud · 03/02/2021 11:27

That it would be for secondary I think

OP posts:
ShirleyPhallus · 03/02/2021 11:27

@Mudmudingloriousmud

That I am thinking out loud at the moment I do not know - because we wouldn't pay out of earning, ie its not a life style choice it MAY be a necessity ..

this is what confused me though, why would the bank allow anyone to increase their loan ?

The bank makes a lot of money from you doing it this way. They have to be sure the can recoup their money if the mortgage fails so equity release like this will only happen if you have decent loan to value (that is, if your house is worth £400k they are unlikely to let you remortgage for £300k plus £50k equity release but you’d probably be ok on remortgaging £150k and releasing £50k)
Original poster
Mudmudingloriousmud · 03/02/2021 11:28

£ 5.500 per term

OP posts:
Original poster
Mudmudingloriousmud · 03/02/2021 11:32

we have a good loan to value. if the house was in 5 lots of 50, we have 1 x 50 left to pay.

OP posts:
IAmongstTheWorld · 03/02/2021 11:38

£5,500 per term plus extras - budget for at least 20,000 per year with uniform, trips and resources involved.

So that would be 140,000 on school fees + plus the new kitchen (variable, depending on what you want).

I am not sure how the poster above thought 80,000 would ever cover a new kitchen and private secondary school fees!

The bank allows you to increase your loan because they will get added interest on it - you won't get the same rates, they get more profit.

Original poster
Mudmudingloriousmud · 03/02/2021 11:47

100,00 on school fees. Kitchen 10 K max

Loans are so low on mort though....

OP posts:
Original poster
Mudmudingloriousmud · 03/02/2021 11:48

The other alternative is state secondary but with us paying for extra Eng /Maths tutors to support...but I would be concerned about all sorts of things in that sense eg I know the school is not good with sen,,,

OP posts:
ShirleyPhallus · 03/02/2021 11:50

@Mudmudingloriousmud

we have a good loan to value. if the house was in 5 lots of 50, we have 1 x 50 left to pay.
So is the house worth £250k and you have £50k left on it? That is very favourable.

But just to check - have you had a recent valuation or know how much it is worth in the current market?

Original poster
Mudmudingloriousmud · 03/02/2021 11:56

Yes we re mortgaged - but normally about 2 years ago, that was because the term came to its end.

OP posts:
titchy · 03/02/2021 11:59

Home improvements very likely to be approved as you are using the extra to add value to the bank's asset. School fees, prob best not to mention that....

NotDavidTennant · 03/02/2021 12:01

@Mudmudingloriousmud

That I am thinking out loud at the moment I do not know - because we wouldn't pay out of earning, ie its not a life style choice it MAY be a necessity ..

this is what confused me though, why would the bank allow anyone to increase their loan ?

They would let you increase the loan for the same reason they gave you the loan in the first place: to make a profit from charging you interest.
Swipe left for the next trending thread