Remortgaging for dummies

[Sopeacefultonight]

Has anyone ever remortgaged or know lots about it?
We’re considering it for a number of reasons, we’ve always thought about extending the house and the garden needs doing, some interior work. We’d also welcome some of the money to help repair our car and visit family abroad.
We have a pretty small mortgage left to pay-£120 K, can anyone tell me what’s involved and if it’s a sensible idea?
The changes to our home should make a significant difference to the amount we could sell
for in the future-adding an extra bedroom (only two bedrooms at the moment) and possibly putting a oool outside (live abroad, it’s not horrendously expensive)

What deal are you currently on? If it’s coming to an end then you can borrow the extra then, or else you remortgage for the extra with your current provider on an additional deal or with another provider.

@Didimum What do you mean for the extra? No deals are coming to an end
Sorry am really not clued up about this at all

The "extra" is the amount you are hoping to borrow in addition to the existing mortgage.

@Createausername1970 So how would it work please? Imagine we ask to borrow 20K, does that then put our monthly mortgage up

So you currently have a mortgage for £120k and you want to borrow £100k extra to do your extension. If your current mortgage is coming to an end then you can take out a new mortgage for £220k with whatever provider suits - £120k on the house and £100k cash in the bank - or if your current mortgage term isn’t up for a while, then you can take out the £100k with another provider against the house. You will then have two mortgages to repay - the £120k and the £100k.

By ‘deal’ I mean your current mortgage. What term are you on? 2yr fixed? 5yr fixed?

Well, if you borrow extra money, you generally have to pay it back. It's very unusual not to.

You can either extend the length of the mortgage to keep the repayments the same or you pay more each month.

You can’t borrow an extra £20k on your current mortgage – you either have to wait til your fixed term is up and take out a new mortgage for the full amount (mortgage + extra) or take out the £20k with another provider and the two mortgages will run concurrently.

Do you have savings to add to the £20k for an extension? A two-storey extension will cost far more than £20k.

As you don't live in the UK, you really ought to talk to your existing mortgage provider. You don't seem too sure about the process and you might get misleading info that doesnt apply to your home country.

You can't usually take out additional borrowing with a different provider, it has to be the same one, as otherwise two banks have a financial interest in your property.

If you're on a fixed rate deal, e.g., fixed for 5 years, and still have 2 years of that left, you can take our additional borrowing on another fixed rate, and it's helpful to try and tie the term of that in to your existing borrowing so they both then 'end' at the same time, and you're then free to remortgage the whole amount to a new lender if you choose to.

If you're not on a deal, i.e., you're on your lender's standard variable rate, you can either choose to borrow more money from them (& also put the original borrowing on the same deal), or move the existing borrowing elsewhere, and borrow the additional amount at the same time.

Just to re-iterate to @Didimum saying you have to go to another provider for the extra bit if you're on a deal, you don't, and most likely won't be able to. In the event of a repossession banks do not want the complexity of splitting their asset with another bank!

We’re on a variable rate and have had the mortgage for 15 years. We’d ideally like to extend the mortgage, not pay more each month.
Where we are, 20k covers an extra bedroom and extra
So I would need to approach another provider?

You don't live in the UK. It might be different where you live.

I would talk to your existing provider about borrowing more and extending the term, so that you don't have to pay more each month.

Or, if you're not tied in to a deal, you can move the whole amount, plus the extra you want, to a new provider, and ask for it to be on the term you want to get the monthly payment you want.

@Createausername1970 Yes I just wanted a general idea of what remortgaging means

@Biscuitsandpizza Would our current mortgage provider/bank be keen not to lose us in this situation

I'm sure they'd like a conversation to see how they could help.

Ah, OK 🙂

In the UK they will value your property to see if they can now lend you more against its value. And at same rate. The idea is basically that you have now paid back some of your loan and the property has increased in value so you can borrow some more.
You can get it from your existing provider or a new one. If you keep it over the same term, your monthly payments will likely increase (unless you get a better rate). If you want to keep payments the same then you will probably need to extend the term again.

Is the property in the UK?
The location really makes a difference. In my PILs home country, for example, you can’t remortgage.

You’re right, I’m thinking of porting your mortgage when you move home, not remortgaging to borrow extra.