Is this good advice from my mortgage advisor or am i an easy target? Remortgaging

[WhyTheHeckMe]

Would appreciate some advise if anyone can help.
We use a mortgage advisor who has always been really good and has been used by many family members for 15 or so years. He helped us onto the property ladder and every decision he's told us (don't go help to buy / don't buy new build as first home etc) has always proved to be good advice and we saved enough to buy an old house, no help to buy, and in the first year of being home owners we made 20k profit, sold up and moved to a much bigger 1930s 4 bed.
2 years later we wanted to do some home improvements so we remortgaged as the house had gone up 30k in value, released 18k equity and took our mortgage to a 40 year one. The mortgage advisor said don't worry just over pay if you can. Our standard payments are £570 a month but we over pay it to £750.
Now we had our review with him as our 2 year fixed term is coming to an end again and he asked if we still have stuff to do. We do - the 18k we released previously was spent on a whole new roof , new Windows and doors throughout, a new porch and bathroom and some plastering work.
We didn't touch the kitchen or conservatory so ideally we need another £13k or so.
His advice is just remortage again! That will mean in 6 years we'll have had

1. First mortgage
2. 2nd mortgage when we moved
3. Remortgaged to release 18k
4. Remortgaged to release 13k

I am now questioning his advice. Obviously whenever we take out a new deal he gets money so now I am wondering if he just sees us as an easy sale?
Or does this sound like good advice?
The way he worded it to us was providing we are releasing less equity than the value of the house increase then we are winning. But already being on the maximum mortgage term makes me nervous especially as I'm 30 and dh is 33.

Hope what I've said makes some kind of sense! Any advice would be appreciated :-)

Could you save up the £13k over the next few years? Personally I'd be locking in a 5 year rate and looking to keep my outgoings low. A 40 year mortgage 6 years on the property ladder is not good, you should be trying to shorten your mortgage length, not increasing the length, payments etc.

But I am risk adverse. We just sold our house for a ridiculous increase but we'd worked hard at paying the mortgage down also.

What is your alternative?

Not get the work done is an option. Save and do it in a few years? Or take out a personal loan. What’s the rate on the personal loan? What is your current loan to value? What will the loan to value be if you take out the money?

Are you looking at five year fixed rates or another 2 year? Why have you chosen a 2/5 year? Are you planning on moving for example? Or having kids? Did he go through all of this?

So many questions, please don’t feel you need to answer! But have you thought about all the above?

It's all relative are you reducing the term? The interest on the equity you are taking out might be cheaper than a loan but can you save it instead. How much extra interest are you paying? You need to work out the most cost effective way of doing what you want to do before you can decide if it's good advice.

Can you give us some numbers
Value of the house
Size of the mortgage
Both your salaries/take home pay
Your outgoings - bills, childcare

A 40 year mortgage is madness in 99% of cases although by overpaying by quite a bit, it isn't as mad

Agree with pp. If the work is not urgent/essential I would just save as much as you can for a few years and keep the equity in the house. Am a bit at a 40 year mortgage. You'll be paying a fortune in interest over that time!

Worth also noting if you go ahead and take a new deal without the extra he would still get the commission (or whatever it's called) just on a lesser amount and I can't see 13k making much difference in what he earns. You can of course remortgage yourself but won't get all providers as some will only deal with brokers.

The alternative is not to get it done yet and to save, however we just had our 2nd baby 4 months ago and so the likelihood of saving like we used to (£1000 a month) is zero.

I don't know what loan to value means I probably should

We have always been on 2 year deals just because he knows that we are quite spontaneous (we sold the first house after 1 year so had to port our mortgage and got a charge for doing so but we were adamant we were moving). I think he thinks 2 year will be better for us for that reason maybe.

And redned that's what I said to him, surely our term should be coming down not going up. But he knows we have a few wealthy family members and said that basically the likelihood of us not getting any inheritance or down sizing in the next 40 years is slim so not to worry and live for now! I'm just so worried that our 2 kids will have nothing from us if we don't ever end up paying it off

Thanks for all the replies , only just seen the rest. Apparently because we are overpaying by almost £200 a month our term will reduce significantly. Will post our figures below...

A long term but overpaying is fine. In fact it could be the thing that stops you getting bad credit if life throws an unexpected thing your way! You can easily stop overpaying but to increase your term can be tricky especially if one of you has been made redundant or is sick for example. If the lender allows you to reduce your payment they can put AP (arrangement to pay) on your credit file, damaging your credit.

Have you tried the MoneySavingExpert mortgage calculator? You can put in all your mortgage details and overpayments and it will calculate how much your mortgage term will be shortened.

My salary - 29k part time (may go back full time in 1 or 2 years). I am currently on may leave but won't be when we remortgage
Dh salary - 34k
Our take home is around £4100 a month.
Bills including childcare when I go back to work (which will be out biggest outgoing by a mile) total around £3050. That's actual direct debits. Doesn't include food/ fuel/ window cleaner / house cleaner :)

House bought at 190k 3 and a half years ago
Mortgage amount was around 167k
2 years later house valued at 220k
We remortgaged and released 18k
Think our current mortgage value is approx 180k?
Mortgage advisor reckons house may now be worth around 235k-240k
We want to take out about 13k

Hoping these figures are right! They are definitely close to this

Worth adding our childcare will come down by around £550 a month in a year and a bit

Ooh thanks sierra I'll have a look at that now

Fees is the big thing to consider with short term products. If you pay a fee every 2 years, that's a constant income stream for the lender and advisor.

There are usually fee free products but you pay a higher interest rate, so you have to work out whether it is worth paying a fee or not. I'm not sure it is for two year products.

I definitely also think regardless of whether you release any more money that you could look at a longer term fixed rate esp with prospect of interest rates going up

I've actually just had my statement through today! Can anyone advise on this... does the monthly interest amount look about right? Pics below

Statement

Interest

I am a mortgage advisor and I don't think he is trying to stitch you up.

If your fixed rate is due to end you will presumably want to go onto another deal even if you don't release any more equity. He will therefore be paid for this, our 'commission' is generally around 0.4% of the loan amount so if you release an extra £13,000 this will only add up to £52.00 more than a like for like remortgage.
I would imagine that he is just making you aware of your options. If you are uncomfortable with borrowing more then just let him know that you would rather save for the additional works over time and that you want to focus on getting the mortgage paid off as soon as you can. Perhaps he can discuss a shorter term or flexible over payments.

I hope this helps, feel free to PM me if you need.

Thanks so much batman that's really kind of you :)

I wouldn't do anything until your childcare costs have come down. Your figures show you only having £1000ish a month for food, fuel etc. If that needs to include haircuts, clothes, holidays, birthday/Christmas presents and lots of other sporadic costs you may find it a stretch. I know it is doable, before people come back saying that they live on less than half that, but life will be nicer if you have some breathing room.

Also, I'd think about how spontaneous you really are now with 2 children. We used to move often but now the children are settled in school we want to stay in this area (would take something very impressive to make us up root children) so it doesn't really matter what our house is worth as without taking on an increased mortgage we can only get something very similar to what we already have. Because of this we've got a fee free 10 year fix. It won't suit everyone but as earlier pp said paying out arrangement fees every 2 years is making your cheap interest rate costly.

I don't think there is anything wrong with a 40 year term. It's just a secure form of renting from the bank, a home that you can't be turfed out of on a whim. Releasing equity every few years is madness though. You will never own the place if you do that.

LTV means loan to value. How much of the value you own, and how much the bank owns.

There might not be anything wrong with a 40 year term in the current low interest rate climate, but the longer the term, the more interest is payable, and the more chance of high interest rates occuring, so if people can manage a shorter term, they should.

Interest rates over the past 20 years have been moderate to low. Go back 40 years and you have the very high interest rates around 1990 and also around late 1970s/early 1980s. Comparatively huge amounts of interest were payable then.

www.mortgagestrategy.co.uk/historical-interest-rates-uk/

Also, by paying off a mortgage earlier, you reduce the chance of ill health etc occuring while you still have a mortgage. The OP is at risk of having a mortgage into retirement.

I'm a mortgage adviser too and think your mortgage adviser knows you quite well! You'll need to look at a new rate anyway if you are soon coming out of a fixed term. I'm sure you don't want to go back on standard variable. What you may pay out on fees you'll be saving on another, new favourable rate which I'm sure he will source for you.

And he is correct to keep you on shorter terms to avoid potential early repayment charges