re-mortgage pickling my head :)

Craigybabes

Hi new here and looking to see if anyone can help me unravel this remortgage conundrum. Currently I am on 4.0% SVR. I have 2 options both of which are 2 year tracker deals;

1. Staying with current lender
Mortgage £50k over 14yrs
Add. borrowing £15k over 10yrs
2.49% above base rate - fee £199.00
£510.00/mth (363/mortgage, 147/borrowing)

2. Going through broker and new lender
Mortgage £65k over 12 yrs inc. add. borrowing
1.49% above base rate - fee £1,300.00 plus broker fee £299
£522/mth

I cannot get my head around the figures but how I see it is that no. 2 reduces the term by 2 years but has high fees. is this distracting me from the real deal? or is no.1 better because i should only be looking at the 2 year deal and not the full term?? Arghh..
Thanks in advance
Craig

CloudCuckooLand

When trying to rationalise the deals, don't spread the fees over the full term, as it is the deal that matters, as afterwards another fee may need to be paid, and another, etc...

Do both the deals allow fee-free exit, should rates rise ?

If determined to have a tracker, I'd go for the low fee, option 1, so you can switch to a fix when rates rise.

Having paid £1600 in fees, you may mentally feel tied to option 2, in order to recoup those fees, then miss the best time to switch away from a tracker.

Don't quite understand the fixation of so many people to two year deals, and the thousands of pounds in fees over the full term, between 12x £199 and 12x £1600...

getmore4less

What are the rates after 2 years?

Craigybabes

Cloudcuckooland: Thanks a lot, i got thinking about 12 yrs but you're right it's about the 2 yr term. It's starting to make sense now.
Deal 1 has an option to bail out free after 3 months and take on another deal with them but a new fee may apply. Deal 2 has an exit fee of 2% of the mortgage owed.
Getmore4less: Deal 1 SVR is 4.0% currently and deal 2 SVR is 4.99% as of now. Both deals will revert to the SVR.

Thanks a lot i think i now know what the score is. My judgement was getting clouded as i was told paying the £1600 would be better in the long term (12yrs) but clearly it IS the 2yrs i need to think of first. Both allow over payment anyway so that's not really an issue.

Am i right in saying aswell that the £1600 fee will incur interest over the long term anyway??

jizadine

Craigybabes wrote: »

Am i right in saying aswell that the £1600 fee will incur interest over the long term anyway??

It will unless you pay it off as a lump sump

getmore4less

Craigybabes wrote: »

Hi new here and looking to see if anyone can help me unravel this remortgage conundrum. Currently I am on 4.0% SVR. I have 2 options both of which are 2 year tracker deals;

1. Staying with current lender
Mortgage £50k over 14yrs
Add. borrowing £15k over 10yrs
2.49% above base rate - fee £199.00
£510.00/mth (363/mortgage, 147/borrowing)

2. Going through broker and new lender
Mortgage £65k over 12 yrs inc. add. borrowing
1.49% above base rate - fee £1,300.00 plus broker fee £299
£522/mth

I cannot get my head around the figures but how I see it is that no. 2 reduces the term by 2 years but has high fees. is this distracting me from the real deal? or is no.1 better because i should only be looking at the 2 year deal and not the full term?? Arghh..
Thanks in advance
Craig

Doing the numbers with
http://www.whatsthecost.com/mortgage.aspx
1.
£50000 @ 4.00% 14y £389.17 ( a bit higher that they got?)
£15199 @ 2.49% 10y £143.21

reverts to 4% (£506 ish 14y)

2.
£66599 @ 1.99% 12y £521

reverts to 4.99% ( £616ish 12y)

OK to do like for like over two years make the payments £540 on both apply the small overpayment to the higher rate and see what is left after 2 years

1.
£50000 @ 4.00% 14y £396 £44,279.76
£15199 @ 2.49% 10y £144 £12,434.51

---

---

£56,714.27
2.
£66599 @ 1.99% 12y £540 £56,090.62


So over the 2 years the lower rate with the fees does work out cheaper.
But the higher follow on rate would be of concern.


I would look for a lender with lower tracker or SVR rates to reduce the need to switch again in 2 years what is your LTV?

Craigybabes

Hi again, thanks again for your time on this. I think you have a different mthly amount on deal 1 because the tracker rate applies to the mortgage aswel as the add. borrowing. so it is 2.49% aswel. the house is valued at 100k so not sure on ltv workings. Many thanks

getmore4less

Ok if deal 1 is all at 2.49% above base (woops).

£65199 @ 2.99% £55,873.46

So cheaper than the lower rate an this deal has the lower follow on so even better.

ltv is around 65% so that gives acces to other cheap deals.

What about a liftime tracker with FD at 2.59 no fee or 2.39 £499 fee

Craigybabes

@ getmore4less many thanks for your input here. You've helped me along my way and i am looking at my options with a much clearer idea. Cheers

getmore4less

Mortgage deals change
I know FD deals have been changing a bit recently so do check anything that you see people talk about yourself just in case.

( I do trey to check before each post but some time they are a day or two out)