Hi guys , I dont know if this has been asked before but here goes
I have a 45000 endowment mortage with the Halifax (endowment with NU), of which i have paid for 12years now out of a 25 year deal.
my question is , could i borrow another 30000 for an extension and some way carry on paying extra years rather than more money per month. The halifax has told us that they would lend us the extra money , but this would be as a second repayment mortgage to add to our existing endowment one. I do not want to pay 2 mortgages(paying another 100-150 a month wouldn t be a problem)
sorry for ignorance on this subject , but i wondered if anyone has a solution having been through it themselves
Depending how old you are, it sounds like a oportunity for a remortgage with another provider, one mortgage for the whole amount over a longer period. You should be able to get a better or fixed rate on the amount as well so you would kill two birds with one stone.
Your are requiring a further advance, as the technical term is. It's really only an addition to your existing mortgage. However, you need some method of repaying it at the end of the term. If you use the repayment method, the longer the term the less you will pay per month but more overall. The cost of a repayment mortgage at, say 6%, is 278 per month over 13 years (the remainder of your term). Over 25 years this would be 194 per month. Both would seem to be over your budget, although you could probably get a better rate than I have illustrated. Maybe you can't afford this increased loan. However, I'm sure Halifax would extend the term to 25 years if you wanted, and you'd just repay the endowment part when your endowment matured (assuming that there's sufficient money in its pot).
That sounds fair enough. Since endowments are out of favour, they are suggesting you either go for a separate 30k loan on a repayment basis, to run alongside your existing one.
Why not? What difference does it make whether you pay two small ones or one big one?
What interest rate do you envisage? At 6%, £150 a month will only pay the interest on £30k. How are you going to repay the capital?
If you *were* going for repayment, then £150pm will only buy you about £16k if over 13 years (to finish at the same time as your existing arrangement), or £23k if over 25 years.
If Halifax will lend you the money, they'll probably agree to lend it to you on an interest-only basis too, they won't insist that you do it on a repayment basis, and they'll probably let you take 25 years to repay it.
But I suppose what you could do is this:
Go for interest-only now, thus paying £150pm for the extension loan together with the existing £225pm you're paying in interest on the £45k loan (plus whatever you're putting into the endowment, say £65). In 13 years' time when the endowment matures and pays off, say, £35k, leaving a "modest" £10k shortfall -- :-) -- you can then channel your entire mortgage budget (of £150+£225+£65 = £440) into repayments towards the remaining £40k balance. That should take a further 10-11 years to pay off. How would that suit you?
Just for completeness, suppose the endowment has no shortfall, then you'd need to repay only £30k, which at £440 a month would take only
7 years and a bit.
But as always, remember that the more you pay in, the faster you'll be debt-free, and the less money you'll have spent in total doing so. And don't forget that interest rates can and will rise, so don't borrow more than you can afford not only to repay, but to service.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.