Help, Which of these two mortgages

shopaholicjules

After reading through the threads I contacted London & Country regards changing my mortgage. I only want to borrow 24,000 which makes some lenders not interested. L & C have come up with two they think are the best for me.
Can someone please advise me on which they think may be the better option.

1. A discount mortgage (3 years) at 4.94 or 4.97 (sorry I've left the paperwork at work), no charges to pay, i.e. solicitors or survey, they will pay these and am able to make overpayments (not sure if I would).

2. A fixed rate mortgage for three years at 4.99, again no fees but unable to make overpayments.

Both mortages are with Principality. I know I would have got a better rate if I were borrowing more.

Any advice please would be greatly appreciated as to which of the two I should go with.

Thanks
Jules

shopaholicjules

Is there anyone who can give me their opinion, I have no clue about mortgages but have narrowed it down to these two.

Thanks
Jules

Ian_W

Hi Jules,
If the arrangements fees [if any] are the same there is so very little to chose between them. There's an article - here - by Martin about chosing between fixed or variable rates but with so little outstanding on your mortgage I wouldn't have thought the certainty of your repayments being fixed would be a big issue. By the same token if IR's go down having a variable rate is going to save you money - but not megabucks.

Really only you can decide. BoL.

mustang_man_2

Before you switch lenders, see what your existing lender can do for you. If they know you are thinking about leaving they may suddenly find a good rate for you. Also a high proportion of lenders charge an 'admin fee' for closing down your mortgage and releasing deeds etc. This fee can range from £0 for some lenders to about £250 for other lenders. Because your mortgage is relatively small any fees like this and especially any Early Repayment Charges could wipe out any potential saving on a better interest rate. It is definitely worth switching or considering switching to a better rate with another lender if your existing lender cannot match it if you have a larger mortgage of, say £100,000 plus. But the switch or not-to-switch question needs to be looked at more closely with a smaller mortgage.

Hope this helps, mustang man (inside the industry).

shopaholicjules

Thanks for the advice, I initially spoke to the Halifax who I am currently with and they couldn't offer any better or the same. My ex-partners name is still on my mortgage and even though I was going to take out a new mortage, they were still going to charge me a few hundred quid to take his name off. By going with someone else there will be the closure fee to the Halifax but I won't be paying to get his name off and will be getting a better rate.

HelpWhereIcan

Just one thing I would double check before making your final decision.

Most 'free legal fees' deals refer only to the 'standard' legalwork done in connection with a remortgage and, in most cases, this will not include a transfer of equity (the legal process of removing your ex from the mortgage that the Halifax were going to charge you for). In most cases a transfer of equity will cost a couple of hundred, so that may be an extra cost that you are not accounting for.

Hope this helps