Mortgage conundrum

sijaro

Hi

We just sold our house which was on a 3 yr Tracker with the Co-op. We assumed that we would just port the mortgage onto a new property when we moved. What actually is happening is that we have to pay 7.5k redemption fee - although they promise this will be given back to us when we open a new product with them to buy a new house. Redemption fee is 3% in 1st year, 2% in 2nd and 1% in 3rd

Looking to buy a 400k house with 25% deposit to keep a reasonable rate with them (we were told 3.6% but now their site seem to indicate 2.49%). My question is, would it be worth changing to a different lender and taking the hit?

Many thanks

Cannon_Fodder

It depends how much better the deal is, and how much you had hoped to be getting ahead by, compared to keeping the deal.

A £300k mortgage needs to have a 2.5% better deal, to make up for the £7.5k redemption fee in 1 year, to then gain in the next couple of years. Or 1.25% over two years - but if the deal is another 3yr one, you'd only be gaining for 1 year and you'd have to be sure the two products increase their rates in the same fashion, as the BoE raises its base rate.

And that doesn't include any differences in product fees.

Its a large, certain outgoing, for a potential, but uncertain gain.

beecher2

sijaro wrote: »

Hi

(we were told 3.6% but now their site seem to indicate 2.49%).

I don't understand this part - are you talking about the ported part of your mortgage, or do you have additional borrowing. If talking about porting, surely you'll be paying the same rate as you were previously? Certainly don't assume that your rate is 2.49%

sijaro

I don't think we can port our mortgage. It seems as though you pay off your mortgage in full and Co-op take the early redemption charge, in our case 7.5k. IF we choose to stay with them and take out a new product, we get the 7.5k back upon buying the house. Not sure whether they would honour this on newly improved i.e. 2.49% not 3.6% deal. I have called them 4 times to clarify this adn got an equally incomprehensible answer each time.

beecher2

Ah I see - I didn't realise lenders would pay you back your ERC if you can't port. That's quite generous of them really - do you have it in writing?

Leon_W

As far as I was aware all Co-Op mortgages were portable. I would certainly check this as you could be giving up quite a decent mortgage product for something considerably worse. Generally it is only any additional borrowing that is taken on another product.

Regards

Gorgeous_George

You have to pay the ERC because you are not buying and selling at the same time. When you restart the mortgage on your new property (within the required timescales) you will be reimbursed the ERC.

I think that all borrowing up to the mortgage that was redeemed should come with the original mortgage's t's and c's. Additional borrowing will be at one of the latest deals and will incur administration costs accordingly.

GG

sijaro

Thanks for the replies guys. It's really hard to get a definitive answer from the Co-op as they won't deal with mortgage enquiries in brand and when I call then I get increasingly convoluted answers from differing people.

I think I have to write to them to ask exactly what my options are and the associated figures.

sijaro

Just been on to Coop and they say that they will keep our mortgage open for 6 months at a rate 0f 2.39% and will pay the redemption fee back when we buy a house. However as we are moving to London chances are we will be buying a more expensive house. To borrow extra money we have to speak to a 'mortgage specialist'. This would indicate that any extra money we borrow is part of a new more expensive product as suggested above.