Need to change mortgage quickly

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boiler-questions
boiler-questions Posts: 22 Forumite
in Mortgages & endowments
I've realised for a while now that I am paying over the odds for our mortgage but just haven't had the time/effort to change it.

I quickly need to change to a new mortgage which would save me loads.

I'm paying about 4% at the moment on a one account. The one account has been excellent for its flexibility but I don't need that as much now.

Our LTV is below 50% so I'm hoping we should be able to get a good rate.

I'm thinking that as I'm used to the buffer of the mortgage we've had, I could either do with a flexible mortgage or to take out more mortgage and put the rest into an easy access savings account just in case?

House is worth around 200k, mortgage is currently about 89k but we could do with taking the mortgage out for maybe 100k and put the 11k into ISAs or similar between me and my wife?

What do we need to start to get togther to swap mortgages?

Any ideas on what the best for us would be?

Is it worth going direct or is it better to go through a broker?

Thanks
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  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    boiler-questions wrote: »

    House is worth around 200k, mortgage is currently about 89k but we could do with taking the mortgage out for maybe 100k and put the 11k into ISAs or similar between me and my wife?

    Why? Whats so special about having the £11k (thats a suspiciously round £100k you've arrived at there) and why "in ISAs or similar"? What will that achieve for you?

    Why not just remortgage to a lower rate and then save and/or overpay?
  • muhandis
    muhandis Posts: 994 Forumite
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    From your post it looks like you want to re-mortgage to a lower rate but also have a cash buffer that you can access if need be.

    Given that you have such a low LTV <50%, in your place I would opt for the second option that you mention below. Up my LTV while re-mortgaging, release some cash to serve as a buffer in a savings/current account with an interest rate equal to or higher than the mortgage (this shouldn't be too much of a faff for the amount of £11k you mention).

    However, whether you will end up "saving loads" or not will depend on the fees you incur when re-mortgaging.

    I would definitely recommend talking to a broker who can discuss the personal circumstances of your case and give you some realistic re-mortgage options that are open to you.

    Good luck.
    boiler-questions wrote: »
    I've realised for a while now that I am paying over the odds for our mortgage but just haven't had the time/effort to change it.

    I quickly need to change to a new mortgage which would save me loads.

    I'm paying about 4% at the moment on a one account. The one account has been excellent for its flexibility but I don't need that as much now.

    Our LTV is below 50% so I'm hoping we should be able to get a good rate.

    I'm thinking that as I'm used to the buffer of the mortgage we've had, I could either do with a flexible mortgage or to take out more mortgage and put the rest into an easy access savings account just in case?

    House is worth around 200k, mortgage is currently about 89k but we could do with taking the mortgage out for maybe 100k and put the 11k into ISAs or similar between me and my wife?

    What do we need to start to get togther to swap mortgages?

    Any ideas on what the best for us would be?

    Is it worth going direct or is it better to go through a broker?

    Thanks
  • ACG
    ACG Posts: 23,727 Forumite
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    A mortgage of sub 2% should be achievable. There willbe offset mortgages at that kind of rate available.

    You willneed:
    3months bank statements,
    3 months payslips,
    Proof of ID and address.

    You can either apply directly or through a broker.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • sotal
    sotal Posts: 5 Forumite
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    Thanks for the answers (I'm the original poster but can't find my normal login details and when I reset the password I put in my email address and it was for this account which I must have registered too!)

    The 2nd reply summed it up nicely.

    I've had a one account for years and enjoyed the flexibility, I'm cautious enough not to abuse it.

    So yes basically I would like a nice cash buffer that I can access when that unexpected bill comes in or when I want to buy something. Hopefully it wouldn't get used but would be there just in case. It doesn't have to be an ISA, wherever would get the most interest, but still provide access if I needed it.

    The 11k, was to round it up to 100k no other reason. Our current buffer is about 30k in the one account but I don't need it to be that much.

    I currently pay about £1000 per month off the mortgage, as that is what is left after the rest of our spend. The interest is something like £350, so I figured that if I halved the interest rate on a new mortgage then this would effectively get halved.

    So I should save around £175 per month? (£2100 per year). Even with a £1000 fee on a fixed 5 year deal, I should save around £9500. This is all from very quick working out so please correct me if I have made a huge error?

    I would probably just pay the same rather than having a saving so I would expect to pay it off sooner. Again from crude calculations I think I would pay off approx £50,000 after interest over the next 5 years. I then plan to finish the mortgage off over the following 5 years.

    If I proceed with the current mortgage and the same payments etc, then I should finish at the same time. However with the first method I should still have £11k in the savings account (Plus any interest from the 10 years)

    This assumes spending stays the same, wages stay the same, and that in bothe scenarios I don't spend the savings/buffer.

    So I do think I should be at least £10k better off by changing mortgage maybe even more?
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    As above you could just get one of the decent offsets around.
    non offset will be cheaper

    The warnings about one account being a poor option/choice have been around for years, probably been costing you £200+pm
  • minimike2
    minimike2 Posts: 2,210 Forumite
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    Borrowing extra to put into ISAs.

    1. As above, why.
    2. If you are looking for the best rates, the chances are the lender will not allow this as a purpose for borrowing.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    All the OP needs to do is take the money out of the account before the remortgage.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    If you've got £30k in your offset why would you borrow another £11k?

    Or were you planning to fold that into reducing the mortage? But if you reduce your mortgage rate so much, then in a few months of saving, you'll quickly get a good sum put by so why borrow an extra £11k that you will pay interest on for the rest of the mortgage term? It's not as if you need it right now.

    And again, why would you put it an ISA ? Interest rates are terrible in those.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    I read it as the plan is to take out 11k and remortgage the rest(100k) not take out the 30k and another 11k.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    edited 10 October 2016 at 6:27AM
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    getmore4less wrote: »
    I read it as the plan is to take out 11k and remortgage the rest(100k) not take out the 30k and another 11k.

    "The 11k, was to round it up to 100k no other reason. Our current buffer is about 30k in the one account but I don't need it to be that much.".
    Indeed but what about the £30k? OP said mortgage is £89k plus they have £30k in the offset so if they use the £30k that makes the mortgage £59k.
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