Home improvement loan and mortgage advice please

Discussion in 'General Chat' started by The Dark Horse, Dec 19, 2017.

  1. The Dark Horse

    The Dark Horse
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    If your mortgage provider lends you money for home improvements do you have to buy yourself out of your current mortgage deal and effectively start a new mortgage for a larger amount? Or are the mortgage and the home improvement loan treated as separate entities?
     
  2. George a L

    George a L
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    2 Separate accounts I'm sure. The home improvement part will be at a different rate usually from your mortgage.
     
  3. The Dark Horse

    The Dark Horse
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    I assume that isn’t classed as remortgaging, just a loan? If you wanted to borrow a significant sum of money (90K) would that mean renegotiating the mortgage term, therefore having to buy yourself out of the fixed deal your on?
     
  4. George a L

    George a L
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    Yes just a loan. But if you are tied in for say 5 years once that expires you can then lump both together on the new mortgage.
     
  5. Anton2015

    Anton2015
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    This would typically be a release of equity loan/mortgage. Yes it’s a loan but it will be secured against the home you live in therefore full MCOB (mortgage conduct of borrowing) rules apply which will mean the usual mortgage process.

    As mentioned above, the rate will likely be different to your existing rate purely as rates change over time. But this would likely be based on mortgage pricing and not loan pricing.

    A full discussion will take place as to your preference for rate / term etc but given the sum, you may wish to align the overall expiry to the existing expiry date of the mortgage.

    So in the first instance you would have 2 separate elements to your mortgage. Whist you remain with the same lender this would likely continue.

    Should you change mortgage provider in the future they would likely consolidate both elements into a single element.

    Each lender can act a little differently in their process / structure but the above would certainly be the case at my bank.
     
  6. The Dark Horse

    The Dark Horse
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    Thank you, I was thinking I would need to pay an early redemption fee and start the mortgage again so great if it’s effectively treated as two separate loans
     
  7. MrSossidge

    MrSossidge
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    It's usually just another loan secured against your house. If you decide to sell before the end of the term for the new loan it would need to be repayed.
     

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