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Advice re Mortgage Top-Up

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  • 03-03-2015 12:30pm
    #1
    Jampip
    Registered Users Posts: 327 ✭✭


    Wanted a bit of advice. I have two mortgages. One is a tracker and I have 14 years left of it. It was for 200k over 20 years. It has 140k remaining on it and the house is rented. The other is a variable rate and my wife and I took it out for our family home. It has 25 years left on it and 153k. It was for 170k. We also have a loan which we took out for a car and there is 7.5k remaining on it and just over three years. All of these are with AIB and we have never missed a payment. We have excellent credit ratings.

    The rented house is valued at 220k and our own home was valued at 350k when built and is now valued at 450k by the rebuild calculator on the Irish mortgages site so neither are near negative equity. After we pay all our bills however, we're struggling each month to have anything left to save and try to improve our home.

    At the moment, we feel the loan for 7.5k is crippling us. The payments on it are €241 a month on top of our two mortgages. We also find that because of all these repayments we don't actually have the 10k or so we need to finish the outside of our family home so that its safe for the kids - concrete to be completed, piers built and electric gate installed. We're also struggling to save because our income is gone in outgoings.

    I contacted the bank about a mortgage top up of 20k. Our hope was to clear the 7.5k loan and then use the remaining 13k to finish the house outside and get a few extra bits for inside. The bank are saying we cannot do that however. They say we cannot get a mortgage top up to clear existing debt. They also say that any works will have to be costed and signed off by an architect and we won't be able to draw down the money until the work is completed. I have offered to do full costings myself but this wouldn't suffice.

    What I'm wondering is what can we do now? Is there any way around this? I've done full costings and an extra 20k on our mortgage would cost us €98 a month and allow us to finish our home. It would also result in a positive of €143 into our accounts as the loan of €241 would be gone.

    Is there any bank would allow us a top up if we were to switch or could a broker or someone negotiate with the bank on our behalf?


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    #2
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    Impossible to give you advice on switching without knowing your ages, gross basic salaries plus overtime, bonuses etc. and how many dependents you have.


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    #3
    kavanada
    Registered Users Posts: 184 ✭✭kavanada


    Jampip,

    The key here is all about interest rates.

    Your car loan of €7.5k, what is the APR on it? 12%? 10%? The only way to really lower your car repayments is to compare car loans and their rates from as many providers as you can.

    Have you enquired with other providers asking will they give a car loan with a lower interest rate to pay off an outstanding loan?

    Putting a further €20k on your mortgage to repay your car loan that will be repaid in 3 years is not the most financially sound thing to do.

    I honestly don't mean this as a lecture, (really I don't) but lifestyle has a cost. I understand you want to complete your house front, at least from a safety point of view. But it will cost you. How important (absolutely needed) is this concrete?

    You're obviously keeping a good eye on your income and outgoings but there sounds like there just isn't much left to spare at the end. Unless you either sell your second property (realise an asset, but I wouldn't recommend) or find a bank willing to provide a cheaper car loan, I feel you'll just have to wait until your car loan is paid off.

    The reason why the €20k looks cheaper is because you're paying it off over longer (and also perhaps a lower interest rate) but eventually you'll end up paying more. Do you see yourself driving this car in 12 or 15 years from now?

    Check out nca.ie if you haven't already. It'll give a sliding calculator for loans etc. and might give the name of a provider you hadn't thought of.

    Be wary of lumping more loans on top of what you have already. Interest rates will go up before your mortgages are paid off but they shouldn't before the car loan is cleared. If you find yourself struggling now, how would you manage with an extra €20k and the ECB rate back up at 3% or 5%?

    If you have more questions/plans/ideas, write them up and it might give us more to go on to help.

    Regards.


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