7.18% to 2.65% ????

flammable999

Hi a few more questions I'm afraid as I am still relatively new.

Just had a word with my lender (Redstone!), as I had misplaced the paperwork that told me what my rate would change to after my fixed term is up this October. They informed me that it would be LIBOR+2%. I am currently on 7.18% interest only. By my reckoning, that would mean if LIBOR stayed as it were, my repayments would drop from £952pm to about £350pm. This sounds too good to me or is this about right? Of course I am mindful that LIBOR rate w9ill change between now and then.

Also, if I were to take out some additional borrowing be it through releasing equity or borrowing more funds, after my fixed term is up, would my additional funds be charged at the LIBOR+2% rate too? Do lenders usually credit check/score you again for additional borrowing or if they see your payment record with them has been good, would this suffice?

Am I correct in thinking, whether I release equity, or borrow more funds, my outstanding mortgage would increase in both cases by the same amount if I am on interest only?

_Andy_

I'm not sure Redstone are doing any new business so may not be possible.
However if they did, it would be at today's rates (whatever they're offering).
And yes they would credit check etc.

flammable999

_Andy_ wrote: »

I'm not sure Redstone are doing any new business so may not be possible.
However if they did, it would be at today's rates (whatever they're offering).
And yes they would credit check etc.

Yes I did hear they werent doing any lending at the moment. We shall see, I only want an additional 15k or so. I just meant would i be charged at the LIBOR+2% rate as opposed to the fixed rate providing I did it after the 2 year fixed period ended.
A
m sweating about my credit score because just before completion first time round, I was hit by 2 unfair defaults by HSBC. Have taken it up with the FOS at the moment. Apart from that, my credit has been spotless for the last two years but I know, I know these things are done on a case-by-case basis! I do read other posts :P

hillcats

If this is true and you rate is going to actually drop by this huge amount, then I suggest that you keep on being used to paying out this same amount of £952pm and seriously think about overpaying the difference between the two amounts off of your borrowed capital. An overpayment of £602 every month off of your capital would do your mortgage wonders...

Gorgeous_George

OP, your numbers are only correct if the mortgage is interest only.

If it is a repayment mortgage taken out over 25 years I calculate that you borrowed £132,500.

After 2 years you will owe £124,410 and your repayments will fall to £621.86 (at 2.65% over the remaining 23 years).

GG

flammable999

hillcats wrote: »

If this is true and you rate is going to actually drop by this huge amount, then I suggest that you keep on being used to paying out this same amount of £952pm and seriously think about overpaying the difference between the two amounts off of your borrowed capital. An overpayment of £602 every month off of your capital would do your mortgage wonders...

You do make a good point about overpaying, but I would like to take advantage of the drop to go back to uni to do a masters otherwise I would never be able to afford it, but after doing that, then yes certainly knocking that much off every month would be great

flammable999

Gorgeous_George wrote: »

OP, your numbers are only correct if the mortgage is interest only.

If it is a repayment mortgage taken out over 25 years I calculate that you borrowed £132,500.

After 2 years you will owe £124,410 and your repayments will fall to £621.86 (at 2.65% over the remaining 23 years).

GG

Hi George, it is interest only over 30 years. I borrowed about 155000 and so after 2 years I will still be at 155000 lol. But I will certainly give some thought to the previous posters suggestion of overpaying by £600 or so

Gorgeous_George

flammable999 wrote: »

Hi George, it is interest only over 30 years. I borrowed about 155000 and so after 2 years I will still be at 155000 lol. But I will certainly give some thought to the previous posters suggestion of overpaying by £600 or so

In that case, with a payment of about £952 I calculate that you borrowed about £159K as £155K would command an interest only monthly payment of £927.42.

Good luck - great rate.

GG

flammable999

Gorgeous_George wrote: »

In that case, with a payment of about £952 I calculate that you borrowed about £159K as £155K would command an interest only monthly payment of £927.42.

Good luck - great rate.

GG

Thanks GG, its great if I have interperted it correctly and it seems too good for the likes of Redstone! Yes yo uare right about 159k. I forgot that they whacked on a 3500 or so arrangement fee at the beginning!

pjcox2005

I don't know the size of your original deposit so you may feel comfortable.

But if you've only been on interest only for the last two years, and it is widely accepted that companies have got tougher on mortgage deals e.g. the LTV ratio?, then wouldn't it be a good idea to try and start paying down the capital in case you do need to move lender. e.g. rates increase so Redstone's offering becomes too expensive.

Also, going back to Uni to do a masters will commit you to spending. Is this wise if you are affording it based on the back of a saving which may not be present for the life of the course?

flammable999

pjcox2005 wrote: »

I don't know the size of your original deposit so you may feel comfortable.

But if you've only been on interest only for the last two years, and it is widely accepted that companies have got tougher on mortgage deals e.g. the LTV ratio?, then wouldn't it be a good idea to try and start paying down the capital in case you do need to move lender. e.g. rates increase so Redstone's offering becomes too expensive.

Also, going back to Uni to do a masters will commit you to spending. Is this wise if you are affording it based on the back of a saving which may not be present for the life of the course?

I hear totally what you are saying and the uni thing is just an idea at the mo. In any case the course would be a year so I'd be banking on libor to not go up too much in a year.

Equity in the house is a 95k gifted deposit. House is worth 250k so bout 62% LTV?