Mortgage Choice

gordon74

I am considering moving from Ulster Bank to a cheaper mortgage. Have been in contact with L&C and they are recommending the mortgage below based on these facts :-
£85499 over 20 years includes the £499 for the fees added to the loan,Term 20 years, repayment basis, estimated value £125,000.
Recommendation
Halifax Tracker variable rate 0.11% below B.O.E.B.R. (which is 4.5%) effective 4.39% for 2 years then to S.V.R. of 6.5%. I can make over payments of up to 10% of the loan amount with no penalty.
Fees payable are
£499 arrangement
£50 Deeds despatch
£148.05 Legal fee (" a non refundable legal fee to your conveyancer for work carried out on your behalf payable before the mortgage completes. The figure is an estimate and does not cover charges for work done on your behalf or fees paid to others such as search fees. You may have to pay other taxes or costs in addition to any fees shown here").
£200 cash back
£200 (estimated) legal fees to my solicitor.
I am paying 1% over base for my current mortgage with the Ulster Bank. Monthly payment £573.95.
New payments are
£709.63 month 1 payment at a variable rate (4.39%which includes initial interest) then £533.96 for 24 months.
573.95-533.96 = £39.99 x 24 payments = £959.76 saving
from this deduct all costs
£499 fees
£50 despatch fee
£175.67 (initial interest included in first payment)
£148.05 legal fee
Total £872.72
£200 cash back
£672.72
£200 Estimated legal fees of my solicitor of (I have yet to price these but will be doing so tomorrow)
£472.72
£125 deeds release feefrom my current lender
£347.72 Total saving over 2 years averages £14.49/month.
Are my sums correct or have I missed something?. Cant' figure out the payment 1 of £709.63 so its not in the equation yet, but yes I know it needs to be.I have asked the Ulster for an improvement and was going to use this illustration as a lever for reducing my existing payments.
Any thoughts much appreciated.

AndrewSmith

gordon74 wrote:

I am considering moving from Ulster Bank to a cheaper mortgage. Have been in contact with L&C and they are recommending the mortgage below based on these facts :-
£85499 over 20 years includes the £499 for the fees added to the loan,Term 20 years, repayment basis, estimated value £125,000.
Recommendation
Halifax Tracker variable rate 0.11% below B.O.E.B.R. (which is 4.5%) effective 4.39% for 2 years then to S.V.R. of 6.5%. I can make over payments of up to 10% of the loan amount with no penalty.
Fees payable are
£499 arrangement
£50 Deeds despatch
£148.05 Legal fee (" a non refundable legal fee to your conveyancer for work carried out on your behalf payable before the mortgage completes. The figure is an estimate and does not cover charges for work done on your behalf or fees paid to others such as search fees. You may have to pay other taxes or costs in addition to any fees shown here").
£200 cash back
£200 (estimated) legal fees to my solicitor.
I am paying 1% over base for my current mortgage with the Ulster Bank. Monthly payment £573.95.
New payments are
£709.63 month 1 payment at a variable rate (4.39%which includes initial interest) then £533.96 for 24 months.
573.95-533.96 = £39.99 x 24 payments = £959.76 saving
from this deduct all costs
£499 fees
£50 despatch fee
£175.67 (initial interest included in first payment)
£148.05 legal fee
Total £872.72
Add on the cash back of £200
£672.72
Subtract estimated legal fees of my solicitor of £200 (I have yet to price these but will be doing so tomorrow)
£472.72
Less a £125 fee for the deeds release from my current lender
Total saving over 2 years £347.72 averages £14.49/month.
Are my sums correct or have I missed something?. Cant' figure out the payment 1 of £709.63 so its not in the equation yet, but yes I know it needs to be.I have asked the Ulster for an improvement and was going to use this illustration as a lever for reducing my existing payments.
Any thoughts much appreciated.

Hi,

The calculation you did is excellent but not quite right:

TOTAL SAVING OVER THE 2 YEARS
£959.76 from which we deduct all the following costs:

499 Fees
50 Deeds Dispatch
148.05 Lenders legal fee
200 Your Solicitor
125 Deed release
175.67 Initial Interest

Add the 200 cashback, this makes you actually £37.96 in total worse off.

The month 1 payment I would think assumes completion part way through a month, thus includes a part month interest on the first payment.(The quote you have should state an assumed start date).

Even factoring this in, you are still only better off by the cashback amount overall.

I doubt you will have much joy using the quote as 'Leverage' with the Ulster Bank as they can only offer you the products they have. If they have a better one than the Halifax, they great, if not then they can't beat it.

Another thing to bear in mind with the calculations is what will the costs be of switching to another product again in 2 years time? Halifax are notorious for only offering their best products to new borrowers, not existing ones.

Ulster bank currently have a discounted rate of 4.79% for 2 years with NO legal costs whatsoever (not even to your own solicitor as they use their own and pay for it) with the only fee being a £295 arrangement fee which can be added. As an existing customer I would ask them to waive this fee. You may also find that they will be able to simply 'switch' you straigh over to the new rate.

Doing the calculations again works like this:

Monthly payment £554.38

£573.95 - £554.38 = £19.57 x 24 = £469.68

Even if they decide not to waive the arrangement fee of £295 you are still better off by £174.68 for the sake of a phone call to your existing lender.

I would see if you qualify for the rate with Ulster Bank and take that instead of the Halifax deal.

Hope this helps

Andy

gordon74

Thanks Andy. Much appreciated.
I did think that when I did the sums it seemed a lot of hassle to save only a small amount. L&C advisor was keen to sign me up there and then (Wed last after a Monday morning chat) but I resisted and said I wanted to consider a few other options. I shall call the Ulster Bank on Monday morning as I have only e-mailed them so far. I would say they probably will waive the fee seeing as I am in the process of moving my business account to the HSBC. Thanks again for your help.

gordon74

Even if they decide not to waive the arrangement fee of £295 you are still better off by £174.68 for the sake of a phone call to your existing lender.



Any tips for the phone call I expect to have tomorrow morning with my account manager?.

AndrewSmith

gordon74 wrote:

Even if they decide not to waive the arrangement fee of £295 you are still better off by £174.68 for the sake of a phone call to your existing lender.



Any tips for the phone call I expect to have tomorrow morning with my account manager?.

Hi Gordon,

No real tips I can offer you. Just be straight with them and tell them that you have been looking around as you are unhappy with the rate you are currently paying. Tell them you know they have a discounted rate of 4.79% for 2 years and would be keen to switch to that one.

Ask them that as an existing cutomer you would be looking for them to waive the Arrangement fee. Then see what they say.

Best of luck and let us know how you get on.

P.S. It's bank holiday tomorrow

Cheers

Andy

gordon74

lol So it is..!.....:doh:

AndrewSmith

gordon74 wrote:

lol So it is..!.....:doh:

You mean you don't have a day of riveting fun planned, mowing the lawns, planting summer bedding, erecting a new bench for the front lawn that 'she' thinks is a good idea?? (Like the Murpheys, I'm not bitter lolol) and all the other traditional Bank Holiday passtimes designed to completely waste the extra day off that I would much rather enjoy on the golf course?

Andy

:rotfl:

gordon74

"It is not how much you do, but how
much love you put in the doing."......:mad:

Enjoy the round of golf..:D

gordon74

Sorry, Andy, just one more thing struck me. I am also paying £58.45 decreasing term life assurance with payment protection and critical illness cover. This was the Ulster Banks own product. I was going to cut this to just the decreasing term and have a quote from L&C of £10.70 a month from Legal and General. Sounds pretty reasonable. Any thoughts?.
Gordon

AndrewSmith

Depends on your age etc however I have to say that £58.45 for term assurance, critical illness and payment protection all inclusive sounds pretty reasonable to me.

If you post or PM your date of birth (and that of anyone else on the policy)and the amount of cover you want over how many years I could do a quick quote for you to give you a comparison to look at? Give you something to go back to them with.

Andy

gordon74

27-12-61 non smoker self only on policy
Not sure about amount of cover. Really, being self employed the business can run without me, well almost. That's why I was considering lowering the cover to exclude the premium protection and the critical illness cover, then using the extra £40ish a month towards the morgage reypayment. I have added you to my contact list on MSN if that's ok by you.
Gordon