Best date for remortgage to complete?

ror100 · 25 July 2014 at 11:05PM

Hi all,
Coming to the end of our Post Office fixed period at the end of July, current mortgage of £138k at 5.20% 25 year term with 5 years fixed.

From 1st August we will switch to a BR+1.99% (so 2.49%) rate.

We have a remortgage arranged (fully approved) with Coventry Building Society for £123k at 3.25%. 20 year term with 5 year fixed.

We currently make payments on the 25th of the month, as we were told it was better to complete at the end of the month (we were 1st time buyers). Currently the conveyancers are saying it will be best to complete on the 1st of the month.

What is best completion date for our current situation?

Finally, if we do complete on the 1st of the month (say August), will we have to wait until September to make our first capital repayment?

Many thanks.

Thrugelmir · 25 July 2014 at 11:41PM

Is your current BR tracker a lifetime rate?

ror100 · 25 July 2014 at 11:49PM

Yes, it's a lifetime tracker, but we are relatively risk averse and prefer the comfort of knowing what we will be paying. I know I would be waiting for the BR to go up and panicking, so the 3.25% was a good compromise given the BOE's expectations for rate increases to come in the next couple of years.

getmore4less · 26 July 2014 at 5:22AM

What the rate after 5 years?

I think you should really consider staying with the base + 1.99% and pay as if you had changed

It makes no difference to the cost when you change.
Actualy the longer you leave it the more you save as your rate is going up.

Cash flow can be an issue is you end up with a couple of payments going out.

any fees?
Lets say rates stay the same for 2 years.
1. £123k @ 2.49% £652pm
2. £123k @ 3.25% £698pm

pay same £698 on both
after 2 years
1. £112116
2. £113965

after 5 years the 3.25% will be £99263

The tracker can go up to 3.86%, a base rise of 1.37%, to be no worse of and still have the base tracker going forward while you go onto the follow on rate or have to remortgage.

If there are any fees then this will be a low estimate.

if rates don't go up the amount left could be as low as £94740 so it could cost up to £5k to hedge the risk of rate rises.

getmore4less · 26 July 2014 at 5:50AM

A quick look on Coventry looks like the fees could be up to £1k and the follow on is 4.49%

if the fees are 1k then the numbers change

Lets say rates stay the same for 2 years.
1. £123k @ 2.49% £652pm
2. £124k @ 3.25% £703pm

pay same £703 on both
after 2 years
1. £111993
2. £114908

after 5 years the 3.25% will be £100114

The tracker can go up to 4.21%, a base rise of 1.72%, to be no worse of and still have the base tracker going forward while you go onto the follow on rate or have to remortgage.

if rates don't go up the amount left could be as low as £94421 so it could cost up to nearly £5.7k to hedge the risk of rate rises.

ror100 · 26 July 2014 at 9:07AM

I'm really not interested in staying on the tracker rate, I want to fix to guarantee my payments. Let's be sensible, I am risk averse, and even on 3.25% I am saving £130 a month.

There are no fees on my Coventry deal, the product I have been offered was withdrawn the day after we applied, so it's no longer on their website.

I really just want to know when is the best time in the month to complete.

Sorry to be blunt about it, but the decision is made. Fixing is best for me and my attitude to money.

getmore4less · 26 July 2014 at 9:52AM

You need to analyse long term
overall I think you are increasing the risk you will be paying more for most of the next 20 years

the best thing to mitigate risk is overpay

marsman802 · 26 July 2014 at 9:55AM

Lol. Interesting take.

Rates really aren't going to rocket but I understand your issue.

I fixed for 4 years at 3.99% when currently I could get 1.6% and pay more capital off...ah well 9 months to go.

And I'm a Commercial Manager! Never fixing like that again - can't wait for a lifetime tracker and all the flex that comes with.

getmore4less · 26 July 2014 at 10:02AM

ror100 wrote: »

I really just want to know when is the best time in the month to complete.

Best for what objective?

I answered allready for cost....
Keep the lower rate tracker as long as possible - so the last day before the offer runs out.

getmore4less · 26 July 2014 at 10:10AM

Two other best timings

For optimum timing of your regular payment not long after you have the money is best, for most that is a few days after the latest they will get paid.

For overpayments with out penalty as soon as you have the spare money.

HappyMJ · 26 July 2014 at 10:18AM

I would love to have a BR+1.99% mortgage fixed for life. I would never change that mortgage ever.

Risk averse? Invest the extra money you save into a savings account earning 3%. Free money with little effort.

I like the savings of £5,700 calculated earlier...any rate rise would have to be quite a lot to offset that hedge. The economy would not be able to cope with such high rate rises for at least 5 years and that's the term of your mortgage. I can see rates rising but not by much and very slowly over a long period.

Best date for remortgage to complete?

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