Interest Rate higher on flexible mortgage

duncan32

Hello all,

I've got the "overpayment bug"!!!!!

At the moment I am with A&L (IR of 4.4%) until March 2007.

At that point I want to swap for a mortgage that allows me to overpay - having seen various programmes and read various articles over the last week it seems rude not too!

I know I am perhaps being lazy, as I could just investigate, but I thought I'd see if someone would give me a quick answer (at the end of the day I can't do anything for over a year anyway....).

The question: Is the IR substantially higher if the mortgage is to allow overpayments? I am thinking that the banks have to get the money somehow?

Thanks in advance,

Duncan

lisyloo

I think the answer is no.

I am on a tracker with Britannia which is 4.5% which is not substantially more than your deal. The fees are relatively low and there is NO repayment penalty.

If you want a truly flexible mortgage then I think you would have to pay more, but a fully flexible mortgage is not the same as one that allows overpayments.

I would suggest looking for a simple tracker that allows overpayments.

Here's an example (no connection).

http://www.britannia.co.uk/mortgage/tracker/2_year_discount_remortgage_package/index.html

The fees would be
£399 application
Disbursements (mine were £86 but can vary)
plus whatever it costs to leave your existing lender.
There is free legals (excluding disbursements) and valuation.

I haven't looked around recently so I'm not sure how this compares, however I think the fees are relatively low compared with some and there is no repayment penalty, daily interest and low exit charges (£110).

duncan32

Thanks for that. Certainly puts my mind at rest, as I had a niggling feeling that for the benefits of being able to overpay there had to be a drawback and that this would probably be higher IR.

Duncan

KTF

Most mortgages have an overpayment facility these days.