Mortgage for extension

Shedite27

I've currently about €320k left on a 23 year mortgage. Repayment is about €1700/month. 3 years left on a 5 year fixed term.

We're looking to do an extension next year for about €70k. My thought was I would add this to the existing mortgage (bringing it to €390k), and would like to extend the term to 28 years which would keep the repayments at €1,700/month.

I rang my provider BOI, and they told me I'd need a new mortgage for the extension, and keeping it to 23 years would cost about €350/month on top of my existing €1700 mortgage.

Is this standard, or should the banks be able to accommodate an extension of the term while an extension of the capital?

namloc1980

Depends on your age / years to normal retirement and also banks have policies around maximum terms of mortgages.

Shedite27

namloc1980 wrote: »

Depends on your age / years to normal retirement and also banks have policies around maximum terms of mortgages.

Thanks for the reply, yeah I should be in check for all that, I'm just wondering if the agent on the phone misunderstood what I was asking, or if that's normal that an extension would be considered a new mortgage rather than a top up to an existing mortgage.

Henry Ford III

Shedite27 wrote: »

Thanks for the reply, yeah I should be in check for all that, I'm just wondering if the agent on the phone misunderstood what I was asking, or if that's normal that an extension would be considered a new mortgage rather than a top up to an existing mortgage.

What age will you be in 28 years time OP?

p.s. Nobody can say if an agent misunderstood you.

phormium

My info on figures might be out of date at this stage but anyway usually top ups are amounts up to around 65k or so and are done as an additional loan running alongside the main mortgage for the remaining term. So your 320k would remain as it is on same term and same rate. Your new top up loan of 65k would be for remaining term of existing loan 23 yrs at whatever the relevant rate when you draw it down.

If you go over the bank's threshold for a top up mortgage whatever that is at the moment then you need to do a full new mortgage for the total amount which leaves you with one mortgage rather than two separate accounts (that doesn't necessarily cost any more though), the total remortgage usually would have an option to pick a new term assuming of course income/age etc is all ok.

So it sounds to me like the bank are saying you need a new top up mortgage that runs alongside the existing one and by default then is for the same term. Otherwise you would have to break the existing fixed rate which may or may not cost money.

Usually you cannot just draw down extra as such on the original mortgage so you can't just take an extra 70k and add it on to the existing account that is there, it either needs a separate loan for the new bit or a brand new consolidation of old and new into a new one.

Jim2007

Shedite27 wrote: »

Is this standard, or should the banks be able to accommodate an extension of the term while an extension of the capital?

Mortgage is just a generic term like car, you can’t buy “a car” and you can’t get “a mortgage”. In both cases you are going to get a specific product with a certain set of features. Banks create financial products like a car manufacturer builds cars. It usually involves a complex set of math models that try to ensure in a given set of circumstances that they will have a profitable outcome.

If the bank you go to does not have a product to fit your exact needs then all the advisor or manager can do is offer you the closest match on their product list. Allowing managers to create their own products would be like allowing the local garage to assemble their own cars... not going to happen.

It’s always going to be a question of being able to add additional features from the list of available to your current model or switch to a new model or an alternative provider if one exists.