£30K loan, add to mortgage, or.....?
Discussion
We have a house in the UK, rented out, and we owe about 50% of the mortgage still, but we want to borrow £30k to build a house in the Philippines. We own the land, just need the readies for building.
What would be the best way to borrow this? Seperate loan? Add to mortgage? Second mortgage?
I've looked at our mortgage companies (C&G) website about borrowing extra, but it offers about 30 different scenarios, all different, all with varying rates and costs, arrangement fees etc.
The crunch is, we need to sort this out from outside the UK, over the phone or net, or it entails an expensive flight back to England. Especially if we both have to sign some papers.
I don't want to phone C&G until I am armed with a little more info, thus I post here to draw on the PH massives intellectual might.
ETA: Our current mortgage is a 4.9% fixed rate, that we took out about four years ago. I think the fixed bit finishes in a couple of years, then we have to reorganise it.
What would be the best way to borrow this? Seperate loan? Add to mortgage? Second mortgage?
I've looked at our mortgage companies (C&G) website about borrowing extra, but it offers about 30 different scenarios, all different, all with varying rates and costs, arrangement fees etc.
The crunch is, we need to sort this out from outside the UK, over the phone or net, or it entails an expensive flight back to England. Especially if we both have to sign some papers.
I don't want to phone C&G until I am armed with a little more info, thus I post here to draw on the PH massives intellectual might.
ETA: Our current mortgage is a 4.9% fixed rate, that we took out about four years ago. I think the fixed bit finishes in a couple of years, then we have to reorganise it.
Edited by King Herald on Tuesday 4th January 15:33
A seperate secured loan will almost certainly cost you more than a further advance, as it will be a 2nd charge and you will be charged for that privilege.
I suspect unsecured lending will be nigh on impossible as you aren't in the uk. (The amount required will be well above most u/s lendinglimits as well)
I assume C&G know you are out of the country? If so then you need to run through the figures and decide which loan suits you best. You also need to know what the max LTV on your current deal is. If the extra borrowing takes you over that limit you might find yourself having to remrotgage and pay ERC's to C&G (even if they renegotiate the whole lot in-house)
If you choose a seperate deal for the extra money you need to make sure its not going to tie you into an ERC that goes out much further than any you might already have. (Although the ERC on £30k will be quite small you don't want to have to pay it if it can be avoided.)
If you want to drop me a line I'll run through the options with you.
I suspect unsecured lending will be nigh on impossible as you aren't in the uk. (The amount required will be well above most u/s lendinglimits as well)
I assume C&G know you are out of the country? If so then you need to run through the figures and decide which loan suits you best. You also need to know what the max LTV on your current deal is. If the extra borrowing takes you over that limit you might find yourself having to remrotgage and pay ERC's to C&G (even if they renegotiate the whole lot in-house)
If you choose a seperate deal for the extra money you need to make sure its not going to tie you into an ERC that goes out much further than any you might already have. (Although the ERC on £30k will be quite small you don't want to have to pay it if it can be avoided.)
If you want to drop me a line I'll run through the options with you.
Just a bit of info here which I hope helps. C&G's standard criteria is such that buy to let deals aren't based on pure rental income, but a combination of both rental and earned income. They also only take into account income which is subject to UK tax. So just bear that in mind before you call them 
hamski said:
Just a bit of info here which I hope helps. C&G's standard criteria is such that buy to let deals aren't based on pure rental income, but a combination of both rental and earned income. They also only take into account income which is subject to UK tax. So just bear that in mind before you call them
I'm already overpaying the mortgage by %30 a month, and we're not relying on the rent for income or anything like that. All my earnings are declared to the tax man, who chooses not to charge me, seamen's tax law and all that.... We didn't actually buy the house to let it, it is our family home, or it was until six months ago.
If you want i can ask about here and see if there is anything that can be done from Singa, its closer at least
edit - just spoken to someone cleverer than me, as you no doubt already know, not much can be done from Ph, he is also advising that you use the UK property to generate funds ... so back to teh origional question and other people smarter than me!
Edited by XJSJohn on Wednesday 5th January 06:22
XJSJohn said:
....edit - just spoken to someone cleverer than me, as you no doubt already know, not much can be done from Ph, he is also advising that you use the UK property to generate funds ... so back to teh origional question and other people smarter than me!
I toyed with the idea of borrowing in the PI, but they have pretty high interest rates and would undoubtedly involve handing over the deeds to the land as security. Much like the UK, but there's no guarantee we'd ever see them again in the Philippines. 
So, I just phoned C&G to tentatively see if it could be done over the phone, whatever we decide to do, and after several questions they tell me: No, because it is a 'buy to let' mortgage, the only way to borrow more money on this house is to do a compete re-mortgage, involving a solicitor and early repayment penalties etc etc. And undoubtedly a visit to the UK with attendant plane fares etc.
It isn't a 'buy to let' mortgage. We bought it, lived in it, and five years later decided to let it out.
It isn't a 'buy to let' mortgage. We bought it, lived in it, and five years later decided to let it out.
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