From: Ronald Raygun 
Subject: Re: financing a second house with mortgage from my first.
Newsgroups: uk.finance
Date: Wed, 30 Jul 2003 12:00:40 GMT

Steve Firth wrote:

> Ronald Raygun  wrote:
> 
>> Steve Firth wrote:
>> 
>> > david fox  wrote:
>> > 
>> >> Is it possible to re-mortgage my first property (with the original
>> >> mortgage) to finance the second?
>> >> Would I be able to avoid the higher charges of the 'buy to let'
>> >> mortgages?
>> > 
>> > Yes to both, but probably not the best way to do it. Get a quote fro a
>> > remortgage o your property. Charcol online is as good a place to start
>> > as any. You could get an on-line quote that will let you know what
>> > options are available to compare with your current lender.
>> > 
>> > Rates and "packages" seem to be better for new borrowers than existing
>> > ones. So it's unlikely that your present lender will be able to match
>> > the best deals available.
>> 
>> Do you really think it likely that he will find a better deal on
>> a straight BTL than on a residential re-mortgage?
> 
> Umm no, and I haven't said any such thing. Just told him to shop around
> for a residential re-mortgage.

So you did, but it came out in a slightly awkward way, almost as
if you were saying "It's a bad idea, but if you want to do it
anyway, then make sure you shop around".  The way the original query
was phrased didn't exactly help either, because the bit "(with the
original mortgage)" can be taken, or not, to mean he was thinking
only of taking a further advance from his existing lender, presumably
at SVR.  Clearly if that's what was meant, that would indeed be
unlikely to be optimal.

Unfortunately the ambiguity in the meaning of "remortgage" is to
blame here.  Generally in the trade nowadays it means "borrow
elsewhere instead", not just "borrow more", though often in
practice it involves doing both.

What worried me was that if his parenthesised bit did not mean
staying with the existing lender, but was just a clause more
particularly describing the first property, then your first sentence
could be taken to pour cold water on the whole idea of remortgaging
the first to finance the second, not just on the specific idea of
doing it with the existing lender.

Likewise, the first sentence of your second paragraph is also open
to misinterpretation, depending on what the reader understands by
"new borrowers" vs "existing borrowers".  If they think an existing
borrower is one who has a mortgage loan, and a new borrower is basically
an FTB, they may gain the impression that not being an FTB will close
the doors to the best deals (which it sometimes in fact does), and
if you can't get as good a deal by remortgaging as you can in a
new-buy, they might think that's true also of a new-buy BTL.

Just trying to clear up any possible confusion.

Pedantically,
Yours etc,