Remortgaging and borrowing extra money?

[toprock]

Currently remortgaging, and looking to borrow an additional £4k on the new 5 year 1.59% fix. Hsbc only allow a minimum of £10k extra borrowing, which I don't need, and which also puts the monthly payment higher than i'd like.

Now they allow an overpayment of around 10% per year which equates to around £8000 on current mortgage. Whats to stop me getting the additional £10k, spending whats needed, then overpaying whats left to in effect borrow the £4k I originally wanted?

They did say I have to list what i'm going to spend the £10k on the mortgage app. Will they really ask for receipts for the work on bathroom etc

 

[Slam62]

How much equity in your house , presumably loads in which case what does it matter what you do with the money.
It should be just a case of remortgage in the usual way unless you are somehow avoiding a revaluation, legal fees and all that stuff.

 

[toprock]

Cheers, valuation already done, and LTV is 42% odd, but they seem very interested in what the extra borrowing is going to be used for

 

[Adam]

HSBC wanted me to jump through hoops and provide 3x quotes for the work I wanted done before they would agree to releasing the equity. In the end I went to a building society who let me release whatever I liked as long as I stayed within the LTV ratio for the product I was interested in.

I therefore released a significant sum and am in the process of improving my property adding value. No receipts, no proof, the money just appeared in my bank account on the day I remortgaged.

 

[Russinating]

Weird. As above we remortgaged with TSB, took a fair chunk out and they didn't ask anything. We did use a broker so he may have given a generic answer.

 

[NightShadow]

Remortgaged with HSBC and borrowed and extra 85K last year. I applied online and then explained we were extending the house over the phone and they did not ask for any proof, receipts etc. Had plenty of equity in the house at the time mind so may be the reason they didn't ask any questions? Maybe something simple like "Refurbish bathroom and internal improvements" will be enough of a "list" for them?

 

[Martynt74]

I've been wondering about doing this to fund a BTL property as it then gives me the option of auction properties with a wedge of cash in hand.

Given that the mortgage will be against the main property and not the BTL is there any potential issues i might come across? I'm into a new mortgage deal at the moment so any additional mortgage would have to be from First Direct

 

[Russinating]

Not unless specific lenders have issues as above. It's what we'll likely do when our current fixed rate term is up.

 

[kinobestew123]

We've just done this. We bought the house 2 years ago with 90% LTV. We've done a lot of work to the house and had it valued at a level which gave us a 65% LTV. We decided to borrow extra to take us to a 75% LTV. The lender seemed perfectly happy to give us the extra cash, no questions asked.

 

[toprock]

HSBC wanted me to jump through hoops and provide 3x quotes for the work I wanted done before they would agree to releasing the equity. In the end I went to a building society who let me release whatever I liked as long as I stayed within the LTV ratio for the product I was interested in.

I therefore released a significant sum and am in the process of improving my property adding value. No receipts, no proof, the money just appeared in my bank account on the day I remortgaged.

This is what I feared! Went ahead and did it online none advised, instead of over the phone on the 2 hour "interview", it asked what the money was for so just chose "home improvements" from drop down menu. Will see if they come back to me for more info/proofs/quotes.

 

[toprock]

Remortgaged with HSBC and borrowed and extra 85K last year. I applied online and then explained we were extending the house over the phone and they did not ask for any proof, receipts etc. Had plenty of equity in the house at the time mind so may be the reason they didn't ask any questions? Maybe something simple like "Refurbish bathroom and internal improvements" will be enough of a "list" for them?

Thats sounds great! lol

 

[psd99]

Do you all think certain banks and building societies have different criteria?

What exactly could the reasons be that they will actually agree to? What if someone said they are going to use the money to buy brand new 50K car or just general shopping? Just saying that there must be some type of "correct" answers here that help get the funds.

 

[toprock]

So the figures from last night application were,

£10,000. 5 year fix @ 1.59%, £999 booking fee waived as already paid for on main capital sum, its classed as a home owner loan but let me have it over the same term as the mortgage.

Worked out at approx £90 a month extra, so I increased the term by 11 months, and this lowered the increase to only £40 a month extra. With interest added of £800 over the full term by doing this. Which I can justify as keeps the payments below £650.

Once i'm done spending will then put the remaining back on the mortgage as an overpayment.

Just need to wait and see how much they want in terms of quotes/receipts now!

 

[touch]

You might be able to find a bank account which pays more than 1.59% and just dump the extra money in there?

 

[toprock]

A fine idea touch! Something i'll look into.

I can already see if the missus has her way the full £10k will go with some of the ideas she was talking about last night lol

There was mention of sofas, american fridge/freezer, spindles, new flooring oh dear!

 

[Psycho Sonny]

You might be able to find a bank account which pays more than 1.59% and just dump the extra money in there?

there are a few which pay 5% and 2.5% however they have a max limit of like £2K or £2500, etc. So he will need to open several of them. Then they have the caveat of you must pay in x amount per month and have at least 2-4 direct debits to get all the benefits (interest).