Chelsea Remortgage 6% Cashback - Good Idea or Not?

Jamboc

Ive been looking at this Chelsea deal also, would you think it worth considering in my case? I'll explain.

House is valued at £215,000 and i presently have a repayment mortgage for £163,000 with the portman, which was fixed for 2 years at 2.29% giving me payments of £757.18 a month, this rate expires in august 2006 and they've just informed me it will revert to the higher rate of 6.49% giving me payments of £1150 a month(i think as figures not infront of me) Unfortunatly I'm locked into this mortage until 2010 with decreasng repayments fees each year i stay 7% this year 6% next etc. I need some money for work on the house and I also have a few debts in the form of credit cards etc that I want to clear as the monthly payments of those combined with the new increased payment for mortgage is goign to make things a bit tight. If i swap now I will have to stump up 7% repayment fee! I originally looked at just a normal fixed rate mortgage(but without such bad ERF's) again and releasing some of the equity in the house, to pay debts, get things done on house, but having to stump up the repayment fee of £11410 to get out of portman mortgage, would eat into the cash i would get from remortgage, leaving me still maybe with debts on credit cards and still a higher monthly payment and not much left to do stuff on house. Looking at the chelsea offer, would not only give me the extra equity release, but also the cashback aswell, which would mean that i have more cash to clear the debts, get stuff on house done, and pay off repayment fee. and the mortgage payment a month is similar to what i will be paying shortly with portman yet i wouldnt have as many other monthly outgoings aswell.

So in my case do you think it a good idea, or is there another way to get out of this situation? Also aslong as i keep the mortgage for the 5 years would i be required to payback the cash after the five years is up if i swap? Is there any other catches to look out for with this? Although 6.49 seems high in 5 years it may not be. any over that period having no other debts and an noticeable rise in salary would allow me to make overpayments to maybe compensate the higher rate and increased level of borrowing.

So good idea or not? Im 30years of age earn £65000 a year, have a good pension, would taking out the mortgage for 30 years be a bad idea to help reduce the monthly repayments also?(im likely to have some inheretance before then so unlikely to have a mortgage by then)

I'd really appreciate your coments on this, Im so miffed with myself at getting talked into taking the portman mortgage, i'd have rather been paying higher amount which would have stopped methinking i ok to spend on the cards!! Silly I know but we live and learn, and then find this site! lol

Regards

James

itsakidsworld

Jamboc

I would not change your lender for cash back with what you have posted.

Even if you were to borrow 90% of current LTV on your home, the cashback would only cover the redemption fees you have to pay. Plus no doubt other fees will apply as is always the case.

You are also borrowing more at the same rate you have available to you so the payments are also higher which would make life more difficult for you.

You have had a great rate and now they want their share back with the higher rate. So if you pay this, keep the LTV as it is and use what you would have paid on an extra loan repayment to clear your credit cards within this four years, you will be better off.

Then in four years, you will be wiser and clear of a lot of credit card debt ( maybe all) and the LTV you have will look smaller which will give you a feelgood factor!!:beer:

So now consider yourself in intensive care of the financial world and the next four years are your recovery:)

Jamboc

Hi

I take your points, and thanks for your help, I do understand that in an ideal world it would be great to just sit and wait suffer the consequences of my spending and try and reduce the debt, as you say in intensive care, problem is im worried the life support machine is going to turn off and rather than get better i will die! lol

In order to keep the monthly payments to a similar figure as the recent increase i was goign to borrow more but over a slightly longer term, say 30 years. this would mean I would pretty much as you say use the cashback to pay the redemption, but with the incresaed borrowing I would have extra cash to pay off credit cards and a loan. hence my monthly mortgage payments have only gone up to what they will do if i do nothing, yet my monthly outgoings will have reduced by £400/£500 a month from the loans etc that i pay out. Giving me 5 years security that ok Im paying a bit more on mortgage but it isnt goign to change, and that I have 5 years to get sorted with savings to be in a better shape when remortage 5 years latter.

I need some way of reducing my monthly outgoings to stay afloat, either that a good rate mortgage, which is hard for me to get because of need of extra cash to clear redemption if i change, or extra cash to remove my credit card/loan debts.

Any other ideas?

Jamboc

any ideas?

nellis10

I took out a £72000 interest only with Accord Mortgages in Nov 05 for 4.89% fixed for 5 years. HTH.

jamesd

James, it sounds as though a personal loan to cover those parts of your debt that are at higher interest rates than the loan would be a better idea.

One option might be zopa.com, where something around half of the loans taken out are for debt consolidation. Rates there depend greatly on the term and amount borrowed, with 36 month terms likely the best rate for your purpose. For the amount borrowed, check in steps of 1,000 to see how the offered rate changes. There's a significant chance that you can find better rates elsewhere,.