richierich

Hello Richard

a secured loan will nearly always be the most expensive solution. The main reason for this is that the second lender will be lower in the pecking order of repayment if you were to default on your mortgage payments and as the risk of loan 2 going unpaid increases, so does the rate.

you will usually get the cheapest deal by looking at the entire debt as one mortgage with one lender but even this has drawbacks.

for example before rates dropped through the floor i was able to secure many clients on lifetime base rate trackers where they pay only 0.5% above the bank of england base rate for the life of the mortgage. but what if that lender wont lend any more whether its for home improvements or any other reason?

well in that instance you wouldnt want to lose a really attractive deal for the sake of a smaller top up mortgage and this is when a secured or second charge loan can work out best because the overall cost of servicing your total debt will often be lower.

the lowest remortgage deals at the moment would still be at least double the rate described above.

another instance of taking the second charge is when your primary lender wont lend but you would incur a big penalty to move and the cost of the extra loan is still cheaper than paying a big penalty and moving.

your question is a prime example for why it makes sense to ask for and pay for the advice from someone that doesnt have a vested interest in you taking lender A over lender B but will put your needs first and demonstrate to you why the recommended option is the cheapest having weighed up all the feasible alternatives.

generally speaking when you offer security for a loan the rates will be cheaper. if that lender is the same as your main mortgage it will be the cheapest of all (generally).

in terms of cost you could make the order:
main mortgage lender - secured loan company - unsecured loan company - credit card - payday loan / pawnbroker / door to door loan company.

the reason for not securing the loan would be if you think you are likely to default as you would lose your home - but some credit card companies have sucessfully taken a property charge even on an unsecured debt!

you also need to consider that your ability to get a good remortgage deal will be effected by your total level of debt on your home and the total monthly commitment from your income of all debts: secured or not

Most 'sub prime' mortgages are only available from specialist lenders and most are available from brokers only. do your research and expect to have to contribute at least 30% of the purchase as loan to values are still low. Some lenders to look at are Kensington& Aldermore or Blemain

Many lenders will offer valuation and legal fee incentives to acquire your business and even though this might sometimes come with a higher rate than a package without these perks, when you add up the cost of them its often still cheaper in the long run.

there is no set scale for valuation fees as most lenders include other charges in the fee scale so you could see a difference of over £200 from one lender to another to value a property of the same estimated value.

A good IFA will help you to get the best deal for your circumstances but you will need a decent amount of equity to make it worth leaving your current lender unless you are on a very high rate as most remortgage deals are only really competitive when you have at least 20% equity. But this does change daily!

Unfortunately it is not really a holiday depending on the lender the missed mortgage payment/s will either be divided over the next 12 months in addition to the normal payment (this is the better option although on monthly budgeting it may not appear so!) or the missing payments are added to the end of the mortgage. (this means you will pay more interest on the deferred payments).
It shoulded be pointed out that deferring mortgage payments to pay for a holiday is not a good idea, payment holidays are limited by the terms of the mortgage agreement and are meant for times of difficulty i.e. loss of job or reduced income to prevent the mortgage going into default and effecting a persons credit file.

Yes.

You can have as many buy to let mortgages as you want, as long as you have sufficient deposit for each, and as long as you meet lenders' other requirements.

You can also have more than one residential mortgage. Assuming you have one residential mortgage, you can obtain a second one as long as the new lender's 'affordability' calculation can be met. In other words, as long as you have enough income to pay your existing mortgage, any other loans and credit cards (and so on...) then a second residential mortgage may be available for you.

However, the lender is likely to ask some pretty probing questions. The last thing they will want is for anyone to obtain a residential loan for a property they intend letting out (it would also be seen as fraudulent to do so). Some people do try this, because residential mortgages are cheaper than buy to let mortgages - so don't go down that route.

Acceptable reasons might be that there is an unavoidable ownership overlap between two properties, and you will be selling your existing house reasonably soon, or you need a second property for midweek living because you are too far away from where you work for daily commuting.

I don't think so. Of the 5,500 mortgage deals available on my sourcing system, 754 are for 5 year+ fixed rate deals

Darren is quite right, where mortgage companies offer deals and withdraw them all the time with revamped terms

An interesting question. When you take a fixed rate deal you are gambling on the average variable rate you would have paid being equivalent to the fixed rate. Let me explain.

Let us imagine a £100,000 interest-only mortgage, with the choice of 3% variable or 4% fixed, with a 2-year special rate. In this example, after 1 year the variable rate jumps by 2%, to 5%.

At 4% the interest-only payment is £4000 each year, a total of £8000. The variable rate payment is £3000 in the first year, then £5000 in the second year - also a total of £8000. In other words, the average interest rates are identical. So how do you choose between them? Just compare the interest rates of a variable rate loan and a fixed-rate loan over the same period. Then double the difference between them, and if you think that interest rates will not rise by that much, then the variable loan is likely to be better. In the example given the difference was 1%, and the rates would have to rise by over 2% for the fixed rate loan to be the better bet.

Now this is a simple example, but the principle is correct, assuming a uniform rise in rates. The question is: would it make sense..... and the answer must depend upon your need to stabilise your finances, how much you could bear a rise in mortgage costs in the short term, and your view on interest rates in general.

Let me also stress the importance of considering the rates that will be imposed following the fixed rate period. If the rate is a competitive one, then you should not have to remortgage, but if the rate is poor then, as you have said, you may wish to remortgage but be unable to because of house values or your own financial position. To be on the safe side, though, do work through the position should mortgage rates have risen a few percent at the end of the special rate - can you afford it?