Remortgage advice end of NR fixed rate!

ecgirl07

Thanks in advance for any advice!

Coming to the end of a Northern Rock Fixed Rate Mortgage and looking for best deal. Live on my own single income household.

I currently owe £28 000 (or there abouts when deal ends April 09). Fixed rate has been at 5.59 % with 17 years remaining. Current value for the flat is somewhere around 80-90K (situated in Glasgow and neighbours across the landing sold for 90K in sept 08) so loan to property value is not an issue.

I have £3K savings and want to use this to reduce capital to £25K and was then looking at 5 or 10 year fixed rates. Ideally i would like a mortgage you can overpay as if i could I would like to pay off within the 10 years. I may also have to go abroad to work so a mortgage with the flexibility to rent out my flat if necessary would be good but not essential. The only other complication is that I am a probationer teacher so contracted only til June 09 and then job hunting - when i get job as teacher will be earning £25K pa

I have had the mortgage "offers" in from Lloyds/C&G and been offered a 5 year fixed at 4.6% with a fee of £995. Other offers 2 year fixes but fees £495 rate 4.3%

Looking long term I cant decide whether to fix for 5 or 10 years? Kind of thinking 5 years and save up capital and reduce balance again after 5 years but then will have to pay another fee of £1000 for the final stretch kinda irks.

So questions:

Am i better waiting on northern rock SVR til the summer to see what happens with mortgages or take the C&G 5 year fixed?

Is there any other better deals out there more suitable to my needs?

5 or 10 a better deal?

Over to you guys for your input:

Rikki

What ever type of mortgage you decide to take you will need to have a job when you apply. You say you will be unemployed from June 09, so you will need your mortgage in place before then and fingers crossed another job in the pipe line.

ecgirl07

Rikki wrote: »

What ever type of mortgage you decide to take you will need to have a job when you apply. You say you will be unemployed from June 09, so you will need your mortgage in place before then and fingers crossed another job in the pipe line.

Thanks for reply :beer:

Ill get a job not too worried and have money in the bank to cover any time without a job. The whole situation is just a bit up in the air but will all work out in the end.

feisty1

As it stands at the moment the NR svr (standard variable rate) is less than yr current rate. The svr is what yr rate changes to when yr fixed deal ends. The mortgage you have at the moment you can overpay without any restrictions and if you needed to borrow back you could do that also. You can also take payment holidays. Go back and read the T&C's of yr current mortgage then you can make an informed choice as to what's right for you

ecgirl07

feisty1 wrote: »

As it stands at the moment the NR svr (standard variable rate) is less than yr current rate. The svr is what yr rate changes to when yr fixed deal ends. The mortgage you have at the moment you can overpay without any restrictions and if you needed to borrow back you could do that also. You can also take payment holidays. Go back and read the T&C's of yr current mortgage then you can make an informed choice as to what's right for you

Thanks - again i don't feel too pressured because my mortgage is relatively small and going on the NR SVR for the summer is not going to break the bank. Longer term I think I would like a fixed rate to see out the mortgage - just so i know where I stand. I would have been happy to fix the remainder of the term with NR as have been with them since the start of the mortgage and have no complaints but NR dont want me so I'm looking elsewhere!!

Joe_Bloggs

There is not a lot on money to be to made from the lenders perspective on £28K. There may be levels/thresholds that they will not consider lending. I'm sure that some other concientious, dilligent MSE volunteer will leap forth and offer their opinion.
J_B.

Joe_Bloggs

I would say it is worth putting in your figures into the FSA Money Made Clear mortgage comparison site. There may be fees for leaving a lender and fees for joining a lender. These fees become a significant influence in the judging of the benefit of changing lenders. The cost of the fees will eat into the apparent benefit of a lower interest rate.
So do as feisty1 says. Perhaps appreciate what you have got for doing nothing and contrast it with something that you could have if you paid close to £1000 in fees.
J_B.

ecgirl07

Joe_Bloggs wrote: »

I would say it is worth putting in your figures into the FSA Money Made Clear mortgage comparison site. There may be fees for leaving a lender and fees for joining a lender. These fees become a significant influence in the judging of the benefit of changing lenders. The cost of the fees will eat into the apparent benefit of a lower interest rate.
So do as feisty1 says. Perhaps appreciate what you have got for doing nothing and contrast it with something that you could have if you paid close to £1000 in fees.
J_B.

I spent a little time last night looking and saw the Cheltenham and Gloucester 10 year fixed which looks like it might just be ok. Product fee £995 10 year fixed rate on £25K for 10 years to clear mortgage overall cost 4.9%

Just looking today they have 10 year fixed rate 5.39 (overall 5.0%) with no product fee, which might be a good shout.

are links allowed? http://www.cheltglos.co.uk/mortgages/fixed-rates/10-year/


help me get the maths right folks I want 25K over 10 years and say I got a deal at 5% with £1000 fee - what kind of interest rate am i looking at if I wanted to compare no fees with a slightly higher rate?

I do want a fixed rate so appreciate that fees may well be involved to secure this.

edit been doing maths:
so looking at the C&G mortgages:

£995 fees on 25K at 4.9 = payments of £268.49 per month.

no fee on 25K at 5.39 = payments of £274.53 and this is the better deal because 274.53-268.49 = £6.04 Per month *10*12 = £724 extra in payments but as this is less than the £995 fees I would be better on this deal than the 4.9% one??

Joe_Bloggs

@ecgirl07
I had a look at your figures. It looks like the no fees deal wins because you get to keep the fees you would have spent on the alternative mortgage choice. The lower interest rate is not enough to compensate for the upfront money of the fees. If you were to invest the fees and make some money from them then the fees deal is even worse.

I did come across a very nicely written mortgage comparison spreadsheet written by an MSE contributor locoblade. I have tested this out in Office 2007 and Open Office 3.0 and it does work.

You might want to look into early repayment charges and exit fees for potential new deals.

J_B.
I am not a qualified mortgage adviser, nor do I plan to be one. I am a mortgage consumer.