First Post - Excuse My Ignorance


M

Mark Downey

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

thanks mark
 
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G

George Edwards

Mark Downey blarted:
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

thanks mark
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.
 
R

Robin Graham

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).

Rob Graham
 
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R

Ronald Raygun

Mark said:
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.
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.
I do not want to pay 2 mortgages
Why not? What difference does it make whether you pay two small
ones or one big one?
(paying another £100-150 a month wouldn't be a problem)
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.
 

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