Woolwich Mortgage is this RATE OK

Thrifty_2

Hi i am looking to re-mortgage to the woolwich flexible tracker onto there 4.99% "initial interest rate" which will track Barclays Bank Base Rate @ +0.49% for the term of the mortgage.I have not yet checked how flexible it is but i know what i need regarding flexibiliy ie: mainly monthly overpayments , is the rate above OK i currently pay 5.35% which is +0.85% above BBBR on a Woolwich offset mortgage which i feel is not working well for me outstanding amount 47k with approx 19yrs left to pay offsetting only 3K at the moment. As i am Self -Employed i would prefer to remain with my same mortgage provider (nothing irregular going on ) i just prefer security and piece of mind.

Joe_Bloggs

Those rates are pretty close together. Lets look at a snapshot of the interest you pay per annum for simplicity.
1) offset
interest paid = 5.35% x (47000 - 3000) = £2354

2) repayment

interest paid= 4.99% x 47000 = £2345

It looks close but the savings were put in a savings account

interest earned = 5% x 3000 = 150 (120 after 20% tax )
Total paid = £2225

Difference = £129

To make the difference zero you would need to increase the amount of offset savings to £12,533.

This is a simplistic treatment but illustratative of the principles. The offset is more flexible but the cost is £11 a month more or 35p a day.

J_B.

Thrifty_2

Fully understand thanks for that no way i have £12.533 to offset

dharm999

Thrifty

I was looking at the Woolwich LT tracker as well but I found a better deal, in my opinion only, at the Hinckley & Rugby BS. Deal is BoE base rate plus 0.15% for life of mortgage. For me fees would be c.£750. It also offers an offset facility, by opening an offfset saving account with them. I got my quote from them today and almost certain that I will take it out. Am just waiting for mortgagegenie to come back to me to see if they can offer same deal so that I can get some commission back.

Thrifty_2

dharm999 wrote:

Thrifty

I was looking at the Woolwich LT tracker as well but I found a better deal, in my opinion only, at the Hinckley & Rugby BS. Deal is BoE base rate plus 0.15% for life of mortgage. For me fees would be c.£750. It also offers an offset facility, by opening an offfset saving account with them. I got my quote from them today and almost certain that I will take it out. Am just waiting for mortgagegenie to come back to me to see if they can offer same deal so that I can get some commission back.

Have looked at site and you are correct about the rates and fee's i am no expert but surely the higher Woolwich rate 0.49%bove BBBR has no application fee's and if you review your mortgage every 2 Yrs which seems to be what is reccomended,you will not of beniefitted from low interest rate if it cost £750 in fees
My mortgage is 47k over 18yrs i review every 2 yrs could a number cruncher out there tell me if i am correct.

Joe_Bloggs

I reckon it would take 3 and a bit years to get back £750 costs on a £47K mortgage @4.65% over 18years when compared to a free 4.99% one. the former works out about £2K cheaper over the term. Not including the initial £750 fees. This low rate but high fee would suit a borrower with a much larger mortgage.
J_B.

Joe_Bloggs

Were these £750 fees used to reduce the Woolich mortgage at the start then the benefit could be a shortened term saving approx £1700 from the end of the mortgage repayment schedule. I doubt there is more than a couple of hundred between the two mortgages over the term.
J_B.

dharm999

Joe_bloggs

You are right, as I have a £128k mortgage, and I make up the fees in interest saving quite quickly, when comparing to the woolwich mortgage. I also intend to use the savings offset offered by hinckley & rugby, as i have c20% of my mortgage in savings.

Over two years taking into account the interest I would earn on my savings if i took out the woolwich mortgage, and the fees on the h&r product, I am better off on the h&r mortgage by c£700.