Remortgage Help

SSno1

Hi,
I was wondering if anybody could help me. I’m looking for a new mortgage deal possibly on a two year deal (as I think interest rate will stay low for at least a couple of years, although this is only based on things that I have read recently and not any previous knowledge) but not fussed about whether it’s a fixed or a tracker. My house value is approx £85,000 and I’m wanting a mortgage of £47,000 over 19 years. These are my best two options that I have found and then there’s the last option.

Mortgage 1: HSBC 2 year fixed rate at 2.99% with £599 arrangement fee paid upfront. (HSBC website)
Mortgage 2: Abbey 2 year tracker at 3.64%, £995 arrangement fee which is added to the mortgage plus £250 cash back. (moneysupermarket.com)
Mortgage 3: Sticking with my existing lender Mortgage Express at a life time fixed rate of 4.84 with no setup fee.

I’ve tried to calculate it myself but the answers don’t seem to add up. The first one I worked out (whatsthecost.com) to be paying a total of £7091. Yet the second option, which to me naturally looks dearer, the website shows after 2 years I would have paid £6,796. Could anybody explain or work out the true costs for me please? And does anybody have an opinion what i should do?

Many Thanks

beecher

It doesn't make much sense to pick a 2 year fix if you think interest rates might be rising by the end of that period. I think you should also be looking at 5 year deals as that will save you from another arrangment fee in 2 years' time.

Are you sure that you've been offered a lifetime fixed rate of 4.84%? Is it maybe a lifetime tracker?

SSno1

The reason why I was looking for a 2 year fixed rate (if my figures are correct) is on a 5 year fixed best one at min. 3.99% with £995 arr fee, after the 5 years I would have paid £18657. Based on the 1st option I quoted with HSBC after 2 years I would have paid £7090 inc arrangement fee. If the rates stayed the same and I got a 2 year fixed again I would have paid another £7090 totalling £14180. If I half the £7090 paid in the 2 year fixed this would give me a grand total of 5 years paying out approx £17725. Over £900 less than the 5 year fixed. But this would only work if after the first fixed term the interest rate available on a 2 year fixed was below 5.2%.

I phoned Mortgage Express up last week and I am sure they offered me a lifetime fixed but I could be wrong. He also stated that the mortgage was not portable which I want so I wasn’t really looking for this option.

getmore4less

Your calcs are not correct(not acounted for the fees correctly).

You need to do like for like.

2 year fix 19y term(add fees to loans)

1. £47k 2.99% fees £599 = £273.91pm
2. £47k 3.64% fees £745 = £290.41pm(tracker so not fixed could get better if rates drop)

pay both(like for like) at the £291 rate(round up for the calculator) after 2years the outstanding amounts are

1. £43,340.67
2. £44,112.77

option 3 4.84% no fees £315pm pay at the £291 rate outstanding after 2 years.

3. £44,449.27

1. is better over the 2 years unless rates drop and 2 might get better but you have to consider what happens after the 2years.

If you think rates will stay low for 2 years what about a low cost no tie in stracker so you can jump into a fix if you get this wrong, with a 2 year fix you don't mitigate the risk of rate rises for very long.

SSno1

Thanks for your help getmore4less didn't seem like my calc's were right. I probably am looking at it short term, wouldn't mind going on a fixed for 5 years but OH doesn't want to get tied in and see the rates stay low.