Offered discount to move my mortgage elsewhere

rrphyb

hi guys

this is my first post, just after some advice

Just recieved a letter from my mortgage company (advantage) offering me the chance to move my mortgage to another lender or pay off the balance by the 30th september 2010 and in return they will wipe off £6900 from the balance!!!!

current mortgage is for 94000 and is on a flexishare product.

they have also agreed to waive all fees, including early repayment, and valuation fees.

Any advice as what to do would be greatly appreciaited.

Cheers

Senior_Paper_Monitor

You need to give:

details of current rates/deal end date/property value

your financial status - earnings (emploiyment), liabilities (loans, C/C balances, dependants etc) and credit rating

before anyone can have a basic guess for you.

rrphyb

current rate is 6.49, but will drop to svr of br+1.49% as from 1st of october. currently paying £448 per month, dropping to £154 if rates stay the same. Property is currently worth approx £105,000 and we have around 4k of debt on credit cards and a small car loan.

I earn approx 24k and partner earns approx 10k, and we have a son aged 4.

Credit rating is not the hot, due to some late payments approx 18months ago. thinks is 800 according to experian.

thanks for the reply.

beecher2

You're not going to get a better rate than the one you'll go onto so I would stick with it, but keep the payments the same in order to overpay as much as possible. You could hopefully get your LTV down to below 80% if you fling everything at it - meanwhile make sure you have no more late payments, and your credit file should improve.

Go onto the Debt Free Wannabee forums if you want more help in getting rid of debts and flinging everything at your mortgage.

rrphyb

ive just read another thread on here and people have been in the same situation, with advantage and have managed to get them to up there offer, so that it may meet the require ltv for a new deal.

my basic calculations show that i would need them to offer £15250 to reduce the ltv down to 75%

Pincher

BOE+1.49%= 1.99%.:money:

94,000 - 6,900 = 87,100
6,900 / 94,000 = 7.34%
Assuming the fees are worth 1,100
8,000 / 94,000 = 8.5%

No wonder they want to get you off their books so they can get better return on their money.

I wonder if they will try the Skipton "exceptional circumstance" clause? You should check your contract.

Overall strategy is to force them into giving you a better offer.
Remember, from 1 October 2010, they are losing money every day, because they have to refinance at the market rate.
They need cash, so overpaying will make them want to hold onto you.

Two of you should have a combined cash ISA allowance of £10,200. Try to get one that pays around 2.5% or more, tax free.
Just go onto 1.99% when October comes.
What you would have overpaid, save into the ISA.

If they sell your mortgage to Webb Resolutions, they will get £50,000 (guess), but they are offering it to you at £86,000,
so they are £36,000 better off.

It's a game of "Deal, No Deal", literally.

I would take the deal if they offered you the mortgage for £60,000.
In which case borrow from friends and family to pay it off,
if you can't get another mortgage.

rrphyb

thanks for the reply pincher, i didnt consider putting the monthly savings into and isa, but it makes much more sense. The only thing that concerned me was the though of interest rates moving back up soonish and then seeing the saving wiped out.

do you think this is a risk worth taking?

cheers

Pincher

Some people would kill to get a BOE+1.49% Tracker (for the term), that's now!

You call that taking a risk?

rrphyb

yep i see your point lol