First Direct mortgage rates cut and cheaper fees

AdamBrunt

Not heard anything from them about my application for nearly a week.

The last stuff we got through the post was the debit cards and cheque books for the bank account (which we haven't authorised (?) yet by phoning them up)

Nanao_2

They seem to be busy, I sent my application with the bank statements, payslips etc last week and is still being processed at the moment.

dadrock

A quick question on FDs monthly payments for a repayment mortgage.
In their Terms they say:-
"Capital payments will be applied to reduce the capital outstanding under your loan facility on the day they are received by us."

Does that mean that every month that I pay a few hundred of the loan (as well as the interest), the loan amount will go down, and next months total payment will be a few quid less due to the new calculation?

I know Nationwide calculate monthly like that, but I know others only update the payment annually.
I would phone, but dont want a full sales pitch for one question! Hope someone here knows.

Jackinbox99

michaels wrote: »

I did this with FD earlier this year for similar reasons although with only a 3 week overlap, however I was in a position to pay off the mortgage on the first property when the second one completed so only had 1 mortgage outstanding - would you be able to do all the mortgaging required on just one property?

Not really as the 2nd house will complete prior to the 1st selling. Once 1st house sells, i will be able to pay a large lump sum off 2nd house, leaving me with a very small mortgage which i`ll be able to clear in abour 5 years. I expect there will be a 3 month overlap at the most between me buying, and me selling.

jamesd

dadrock, yes, the capital repayment immediately starts reducing interest from the day you make it. Less interest means a lower payment in later months. There's really no need to be hesitant about phoning them, they wont go into sales pitch mode, just help you with whatever questions you have. They could also tell you whether there's an option to fix the payment if you want to do that.

AdamBrunt

Got a big envelope through the door from FD this morning - thought this would be the confirmation of the offer, etc.

Sadly, not ... just them returning all the payslips, etc, I had sent in.

I have a question though ....

We went with the normal repayment mortgage as opposed to the offset. Am I right in thinking there isn't much difference between the two provided you use ALL the remaining money in your bank account each month to overpay the mortgage ?

luckyfool

AdamBrunt wrote: »

Got a big envelope through the door from FD this morning - thought this would be the confirmation of the offer, etc.

Sadly, not ... just them returning all the payslips, etc, I had sent in.

I have a question though ....

We went with the normal repayment mortgage as opposed to the offset. Am I right in thinking there isn't much difference between the two provided you use ALL the remaining money in your bank account each month to overpay the mortgage ?

The offset means that you benefit from offsetting the balance of the account during the month as well, not just once you have overpaid it. This makes a small difference, other than that and losing access to the money you have overpaid it should be a similar impact on term.

pardal51

luckyfool wrote: »

The offset means that you benefit from offsetting the balance of the account during the month as well, not just once you have overpaid it. This makes a small difference, other than that and losing access to the money you have overpaid it should be a similar impact on term.

I sent my docs today, hopefully will get our FD aco!!!!s up and running quickly.
I decided to go offset, but also making repayments for the capital. From my calcs (excel spreadsheet), if I can keep a decent balance on our accounts we should be able to reduce the term of the mortgage. Anyway, 1st need to have aco!!!!s open, then offer in writing.

Nanao_2

Mortgage has been approved, subject to survey. They are sending the offer in the post, and will be arranging the survey in the next few days. Yay!

Thrugelmir

dadrock wrote: »

A quick question on FDs monthly payments for a repayment mortgage.
In their Terms they say:-
"Capital payments will be applied to reduce the capital outstanding under your loan facility on the day they are received by us."

Does that mean that every month that I pay a few hundred of the loan (as well as the interest), the loan amount will go down, and next months total payment will be a few quid less due to the new calculation?

With a repayment mortgage every month the proportion of capital repaid increases. However your monthly repayment is calculated to repay the debt over the entire term of the mortgage. So actually remains the same every month. On the basis that there is no change in interest rates during the term of the mortgage.

As an example on a £500 monthly repayment.

Month 1 Capital £100 / Interest £400
Month 2 Capital £101 / Interest £399
Month 3 Capital £102 / Interest £398

On a £100,000 mortgage it will take over 16 years to have repaid over 50% of the capital (£50k ) on a 25 year mortgage term.