Fixed rate Offset

MortgageMamma

telegrapic transfer fee, valuation fee/administation fee?

Fix_Rate

MortgageMamma wrote:

And the early repayment charges? the exit/deeds release fee's?

As i am with them already there is only the booking fee. There are early repayment fees as there would be with others but to be honest and i suppose i could be being niave i don't see me paying it off that quick. At the end of the 5 year period i go through all this again!

MarkyMarkD

Don't EVER compare APRs on mortgages unless you seriously intend to stay with the same product for 25 years. They are meaningless twaddle.

Compare the ACTUAL pay rate, and add on any fees (starting and ending) spread over the term. E.g. a £295 fee is £59 pa over 5 years, which is 0.059% on a £100k mortgage - not a lot!

5.49% isn't a very good rate, per se. Moneyfacts Best Buys (http://www.moneyfacts.co.uk/mortgages/charts/mortgages_fixed_noext.htm) lists Direct Line as doing 5 years fixed for just 4.89%, with a £499 fee, free legals and free valuation. So that's exactly comparable to your £295 fee LESS any redemption admin charge on your existing loan - let's call that a nett £0, as redemption admin charge is unlikely to exceed £295.

So, if the £499 fee over 5 years = £100 pa is worth less than a rate saving of 0.60% pa, you should stay with FirstDirect; if your mortgage is more than £16,667 (£100/0.006) then it will save you money* to remortgage to Direct Line.

* Ignoring the hassle of moving mortgages.

cloud_dog

I think the question you are missing is, do you have sufficient funds (savings) to make an offset account the best option? If you don't then I would suggest (as per MarkyMarkD's post) that you look for a top rate fixed mortgage, possibly find out if your lender allows over-payments within the fixed period, i.e. so much per month, or a percentage per annum.

Me, I've never been able to get the offset figures to work to my benefit (despite a reasonable stoozing pot).

cloud_dog

Fix_Rate

I understand all that apart from the last paragraph. My mortgage is 120k available but actually approx 110k. More than 16k as you mention. Not sure why Direct Line would be cheaper? And i thought the lowest rate for comparison is best?
I will look into the Direct Line mortgage though.

silvercar

If your just looking at offfset rates I think YBS is under 5%, Coventry is 5.09%.

MarkyMarkD

Fix_Rate wrote:

I understand all that apart from the last paragraph. My mortgage is 120k available but actually approx 110k. More than 16k as you mention. Not sure why Direct Line would be cheaper? And i thought the lowest rate for comparison is best?
I will look into the Direct Line mortgage though.

Because, on a mortgage of £110k, you will pay the following if you remortgage:

£295 to leave existing lander (max)
£499 to switch to Direct Line
£110k x 5 years x 4.89% = £26,895

Total over the 5 years = £27,689.

If you stay where you are and take the 5.49% rate, you'll pay:

£110k x 5 years x 5.49% = £30,195.

Pretty much a no-brainer that you shouldn't stay where you are - it will cost you an extra £2,500 (give or take) or £500 pa if you do.

Hope that helps.

stanmoresaver

MMD's analysis of the situation is IMHO correct.

But it is my belief that before you look at products (rate-term etc) i't is vital that you look at how you life will possibly change durring the mortgage term and how any product can accommodate them.

0.5% interest pa is nothing compared to a penalty of 5-6% or 6 months interest at SVR if you have to bite the bullet and pay the mortgage off.

SS

MarkyMarkD

Stanmore

You are quite right about the importance of only tying yourself in as long as your are prepared to be tied in ... but I think the comparison was between getting tied in on a retention deal with the existing lender (at a bad rate) and getting tied in on a new customer deal with the alternative lender (at a far better rate), in which case the decision to be tied in had already been made.

Given portability of most mortgage products, the significance of penalties is not what it might have been a few years ago.

stanmoresaver

Fix_Rate wrote:

Do i take it you think this is a good deal beimng a broker and all that? The 5.7% is the overall APR for comparison which is as i understand it the best way to compare - please correct me if i am wrong. The actual rate is 5.49%

I'm no mathmatician but the apr system is a needlessly complicated way of comparing deals- it assumes 1/ you will stay with them for the duration of the whole mortgage and 2/ that interest rates will not move over the duration of the whole mortgage.

pointless!

QED.