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Re-mortgaging in the first 6 months

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  • Re-mortgaging in the first 6 months

    Hi,

    I bought my flat 6 months ago as a repo and have been lucky enough to have benefited from a £25k price increase since purchase. I'm looking at buying a property with the aim of developing it in the next few months and am planning on releasing some of the equity in order to fund it.

    I have spoken to my lender (C&G) and they have offered me a home owner loan for around £20k (pending valuation by them) at a rate if around 5.5% which equates to around £100 a month. I have also thought about re-mortgaging and releasing the equity this way. The penalty for doing so is £2400 but i'm not really sure which is the best route to take.

    Any advice will be greatly appreciated.

    Andrew

  • #2
    Are you looking to re-mortgage with the same lender? Often they will not charge you the 'early repayment charge' if you are switching a mortgage. You will still have to pay the 'product fees' and for another legal and admin work required.

    If you move your mortgage as you are probably aware you will need to pay the ERC (generally about 3% but varies massively).

    Out of interest, how did the process of buying a repo'ed house go for you? I have an offer in at the moment but it's annoying everytime the EA phones to tell me I'm been outbid...

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    • #3
      This post is a little old now but I just came across it and thought I should make a point. remortgaging within the first 6 months of ownership can be very difficult. Most lenders need you to have owned for at least 6 months before doing so. You may have already found this out by now - or passed the 6 months threshold anyway - but i thought it worth while pointing it out.

      in addition, based on the loan amount required and the ERC's to get out of your current deal, i would suggest that a further advance would be the way forward for you. 5.50% isn't minding blowing but when the fees are considered using your alternative, it makes sense to go with the advance.

      once you have reached the end of your fixed deal with C&G on the first charge, you could remortgage - with C&G or elsewhere - and combine the two loans at that stage. 2nd charges/further advances now come with a max penalty of 1 months interest by way of ERC which will be minimal based on your figures thus making the remortgage economical.


      I hope this helps

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