Remortgaging soon?

Cazzywazzywoo

My house is currently worth £250k and we have a fixed rate mortagage at 4.89% which is due to finish on 30th April.

The outstanding mortgage is made up part of endowment (£40k due to finish in 2016) and part repayment (£78k due to finish in 2019).

I have just telephoned the bank - Bank of Ireland - and they tell me that after 1st May I will convert to the SVR which is currently 3.99%. This could reduce my monthly payments from £987 to £922.

I was going to remortgage but having heard this I am seriously considering staying on the SVR for a period of time.

They tell me that if I pay a one-off fee of £65 I could continue to pay my current monthly amount (£987) and reduce the term by about 12 months. As I can still afford the £987 I am tempted to do this. What do you think?

Any thoughts about when I would be best to go back on to a fixed rate?

Thanks a lot
Cazzy x

Robert_Sterling_3

Over pay on the SVR. :T :T :T

catriona69

I don't understand why there would be a fee of £65 just to overpay your mortgage each month. I think you need to double check what your options are.

beecher

I would overpay, but I don't think I would be paying a one off fee to reduce the term just now. At some point in the future you'll be organising another fixed rate or variable - it was my understanding that you can change the term at no cost once you do this.

Cazzywazzywoo

Thank you for your responses!

I think I will stay on the SVR for a while and see what happens with interest rates.

I will investigate the one-off payment too and see if I can get out of paying this. I know they said that I could also overpay a lump sum of up to £2k per year - but if I manage to save £2k I am likely to spend it on a holiday rather than over paying my mortgage! Thats why over paying a little bit each month seems much more attractive....

Thanks again
Cazzy x

beecher

Cazzywazzywoo wrote: »

I will investigate the one-off payment too and see if I can get out of paying this.

Ask them if you can overpay and not reduce the term - I can do this without penalty (within the 10% limit) but am charged if I ask to reduce the term. They cut the mortgage amount instead, so you'd just up the overpayment a little each time they do so.

Heyman_2

I think you might have misinterpreted that whole £65 one-off fee business.

£65 is the difference between £987 (what you pay now) and £922 (what you'll pay on the SVR) - maybe they just meant that if you overpay by £65 a month at 3.99%, you'll take 12 months off the mortgage. That sounds more logical to me.

AirCooledHeaven

Cazzywazzywoo wrote: »

My house is currently worth £250k and we have a fixed rate mortagage at 4.89% which is due to finish on 30th April.

The outstanding mortgage is made up part of endowment (£40k due to finish in 2016) and part repayment (£78k due to finish in 2019).

I have just telephoned the bank - Bank of Ireland - and they tell me that after 1st May I will convert to the SVR which is currently 3.99%. This could reduce my monthly payments from £987 to £922.

They tell me that if I pay a one-off fee of £65 I could continue to pay my current monthly amount (£987) and reduce the term by about 12 months. As I can still afford the £987 I am tempted to do this. What do you think?

Thanks a lot
Cazzy x

If you can continue to afford to pay £987 then consider increasing the percentage of your mortgage that is on a repayment basis. This way you'll reduce your exposure to future potential (inevitable) increasingly dismal returns on your endowment policy.

beecher

Heyman wrote: »

I think you might have misinterpreted that whole £65 one-off fee business.

£65 is the difference between £987 (what you pay now) and £922 (what you'll pay on the SVR) - maybe they just meant that if you overpay by £65 a month at 3.99%, you'll take 12 months off the mortgage. That sounds more logical to me.

Ah well spotted - that does seem likely

Cazzywazzywoo

I have telephoned the Bank of Ireland to double check the £65 fee.

They tell me that I would have to pay a £65 arrangement fee to change the terms of my mortgage. This can be paid upfront, added to my mortgage or added to my next mortgage payment. I have to pay £65 if I change the terms in any way - and this includes changing the term period.

If I pay £992.76 per month my term will go down by 12 months.

Thanks everyone for your advice
Cazzy x

beecher

That sounds odd to me - why can't they let you overpay but keep the term the same? That would mean that you aren't changing the terms of the mortgage.this is certainly what I do with HBOS.