Difference between remortgage and new fixed mortgage?

kiwichick

Hi All,

Sorry, I didnt know where else to ask this question! My 5 year fixed term has come to an end and with Martins advice being what it is I'm looking to fix again for a similar term. However I dont know what the difference is between refixing and remortgaging? And am I able to fix my mortgage with a lender other than than one I use right now or is that what remortgaging is?

Am completely lost so really appreciate any help.

Allison.

getmore4less

Same thing. remortgage is just changing any mortgge to another, one of the options is a fixed.

What is your follow on rate?

Why do you think you need to fix?

Burridge60

Re-mortgaging to another lender would mean that the lender would need to re asses your income situation have your house valued as well as the legal transfer of the house legal papers from the old lender to the new.

Re fixing or taking a follow on deal is merely staying with your current lender. You are already customer so you are not a new "risk" that they have to check out your income and the property value.

Having said that some lenders are taking the chance to offload a wodge of customers they no longer want (see Northern Rock merged threads). Some are even writing to their customers saying that they believe their loan to value (LTV) has dropped a band and they can no longer offer them a follow on deal or a highly inflated rate.

Presuming that you are happy with your current lender it is always worth seeking out their deals before you then see whats out there on the open market. Please pay attention to the fee being charged as well as the rate as some very low rates might not be right as the fee added to your mortgage will make it much more expensive especially over short term fixed periods. Your follow on variable rate might be competitive and better keeping than doing a new deal

kiwichick

Thanks for your replies guys. My rate currently is base rate + 0.75% which I think gives me a rate(I think!) of 1.25%. While i know thats an amazing rate I'm worried simply because I've never followed a variable rate before.

My understanding (when reading my monthy mortgage statements) is that with the interest being so much lower, more of my monthly payment is coming off the capital. Is that right? I'm a single mum of three on a tight income and am so unsure of what is the best option for me. Currently my payments on a £130k mortgage have dropped from £769 to £548 so I am making a significant monthly saving which is helping to clear some other debts.

Any advice?

Al

GuidoT

Stay where you are for now, 0.75% above base is a very good deal. The days of those deals are over trackers are around base rate +3% at the moment.

Watch interest rates though. My view is that they may go up half a point in the latter part of this year and then gradually increase in 2012 and 2013 to around 4%, but what do I know!

What was you fixed rate for the 5 years, the £769 to £548 does not seem to add up. Maybe you have a collar (which means if base rates drop below a certain level then there is a minimum rate the banks charge you, usually around 2%) who is your lender?

kiwichick

I'm with Alliance & Leicester. On the old mortgage I had £130k on a fixed rate of about 4.59% I think? And another £10k on a variable, I dont know what the rate on that is, if its the same at the base + 0.75%? As of today I have £128353 on 1.25% (paying £492pm) and £9712 on the variable (paying £56pm). There is another 25 years to go on the term.

Burridge60

kiwichick wrote: »

My rate currently is base rate + 0.75% which I think gives me a rate(I think!) of 1.25%. While i know thats an amazing rate I'm worried simply because I've never followed a variable rate before.

Sounds like it could be Alliance and Leicester now Santander and if my memory serves me right it is also portable!.

What rate did you have before?

It would be best to have continued paying the higher amount all the way through ands you can do this by ringing your lender and asking them to keep your payment the same when the rates went down. This would have overpaid your mortgage and got you ready for when rates go up.

If you don't want to do this make sure you skim into a savings account the saving you are now making against what you paid on the fixed rate. That way you will be sued to doing without the cash when the rates go back up and have a worthwhile sum to be pleased about.

With a rate as low as that you would be foolish to lose it as lenders will never be that generous (or stupid) in their product pricing again. I guess they were being run by young blood who never realised BoE base rate could go down so low!

dunstonh

and with Martins advice

Is Martin now authorised to give advice?

kiwichick

Burridge60 wrote: »

With a rate as low as that you would be foolish to lose it as lenders will never be that generous (or stupid) in their product pricing again. I guess they were being run by young blood who never realised BoE base rate could go down so low!

My fixed rate only ended in December and thats when they offered me this one.

alexlyne

I'm ignoring Martin's advice for now. Does that make me a naughty boy?