Mortgage Top up

[kit]

Just a couple of questions in relation to topping up a mortgage.

Is it always the case that a new loan account has to be set up for the top up? I had presumed that the amount would be added to my current mortgage and so I would be making just the one monthly payment not two.

Is there any reason my mortgage provider would quote me a rate of 4.25% variable when my own mortage variable rate is 4%?

 

[WizardDr]

Because of securitisation and mortgage bonds, many lenders will open a new account for equity release.

The different rates reflect that one is charging more than the other.

At 4.00 it sounds like you would do better elsewhere, except for legal fees.

You could ask them about tracker rates which many find better value than the ole variable rate.

 

[Hel_n]

Top up loans are generally separate to the exisiting mortgage as they are taken out after the original mortgage. When the lender offers the same rate for top ups as for standard mortgages (not in your case!), it means that although you are making two separate repayments the overall repayment would be the same as if it was just one loan.

However, if you were to remortgage you would have one loan, one monthly payment and one interest rate, and probably a better one than your current lender is offering you