Remortgage of Second House

Posted on 13 August 2012 by arnold

My son has two houses.  His first house has a mortgage on it, his second house is paid for.

The mortgage company no longer want mortgage customers and have written to him saying if he does not go to a new company he will have to go onto a variable mortgage when his fixed deal finishes.  He went to a new provider and was advised that because his house has lost value he is now in negative equity and he could not get a mortgage.  They proposed at taking out a mortgage on his second home to pay of the original mortgage. The second house is worth substantially more than the first house, does this make sound sense? thank you


Whether this makes sense is going to depend on the variable interest rate your son is going to revert to on the existing mortgage compared to the interest rate he would have to pay on the new mortgage.  It is possible that the variable rate is going to be lower than any new interest rate, especially if your son lets the second property or it is not his main residence.

The other factor that your son should take into account is the type of interest rate.  If he is currently on a fixed rate then it is likely he likes the security of knowing that his interest rate is not going to change and he can budget without worrying about future increases in his mortgage payments.  He will not have this with a variable rate mortgage and may want to change just because of this?

I believe we can help your son and that he would benefit from speaking to one of our independent mortgage advisers.  Please ask him to call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help him find the right mortgage for his situation.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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