New Borrowing - Advice appreciated

iandv

Hi

We are moving home and need to borrow an additional £69000 to our existing mortgage balance of £62000 which is currently on a fixed rate of 4.24 until Dec 2011 but comes with an ERC of £2,600.

The house we are purchasing is £155k and we plan to put 15% or 20% deposit down.

Our existing lender has offered a fixed rate of 4.65% on 85% LTV until December 2012 with a £1000 arrangement fee.

My concern is that I have two rates ending at two different times and paying £1000 for a 2 year fix which is not giving me great value as its only for just over half the amount?

Their SVR 4.74% on new borrowing has an ERC until March 2013, which is no good really.

Would I be better off paying the £2,600 ERC on my existing mortgage and look for a better long term fix?

As rates are suggested to rise steeply in 2012/early 2013 ideally I would rather a 5 year fixed rate deal.

Is it worth asking my lender who we have been with for 7 years to see if they can offer a similar deal to keep us as a customer?

Hope you are still with me and I hpe somebody could lend advice and guidance.

Many Thanks

Thrugelmir

Lenders have no need to offer deals.

Fixing for a longer period would seem a more sensible option. Though there is little opportunity to avoid the ERC.

One option would be to take the new borrowing on a variable rate basis. Then consolidate the entire mortgage balance in December 2011 onto a longer term fix.

iandv

thanks the problem with going on their SVR of 4.74% is that it also has an ERC until 2013 applied to it meaning that I would not be able to consolidate the two rates when my existing rate expires in 2011

any ideas on what I should do?