Early exit offer from Santander fixed rate mortgage

8LUNNST

Hi all,

We are currently on a 5 year fixed rate with Santander, at 4.84%, which expires early July. They have written to us saying we can exit early from the deal, to another deal with a better rate (either fixed or tracker), with no forms to fill-in, no legal or valuation fees etc. And the usual text about uncertainty in the BOE rate and possible rises, so might be a good time to move now.

Gave them a ring, and it is staggering how, despite the BOE rate being a lot lower than it was 5 years ago, a 5 year fixed is about 4.99%, with a 1K booking fee. Compare that to our existing rate of 4.84%, and for which we didn't pay anywhere near 1K for booking / arrangement. I think it was about £500, or possibly a bit lower.

Sure, we could improve on our existing rate by choosing a shorter term fixed, but I don't see the point in a 2 or 3 year one, plus the booking fees all seem expensive. Maybe that is the case with everyone now?

Haven't done much of a comparison with other lenders, but just went to First Direct, and they seem cheaper - a 5 year fixed at 4.59%, with £199 booking fee. And that is without really trying to do much of a comparison. The same goes with comparing tracker rates between the two - Santander don't seem to offer a lifetime tracker, but FD do (2.49%, which is 1.99 above base, £199 booking fee). I've also recently seen HSBC offering a slightly better tracker with low fees.

So although I could get out of my current fixed rate early, it may be to an uncompetitive deal. I guess by July there will have been at least one rate rise, so mabye other deals then will seem just as expensive. Bit of a dilemma whether to wait or move now.

_Andy_

8LUNNST wrote: »

Gave them a ring, and it is staggering how, despite the BOE rate being a lot lower than it was 5 years ago, a 5 year fixed is about 4.99%, with a 1K booking fee.

Mortgage funds aren't obtained by the lenders at BOE base rate.

Peelerfart

You could always book the FD deal now and not take it up 'til July.

I think you've got 6 months but please check

PF

Stroller133

Check what your mortgage reverts to first? Our 5 year fixed with Santander (prev A&L) is also finishing soon. I called and found that after fixed deal we go on to BOE +0.99% - which 5 years ago would have been higher than our fixed so did not sound anything special which is why I had forgetten about it. They would only offer us 1 year fixed and after that it would be BOE +3.49%. For us it was a no brainer as I doubt BOE will rise above 3.5% in next twelve months and after that we would still endup paying 2.5% more on tracker rates.

8LUNNST

Andy, true - I think on average the lenders currently borrow at 3%.

The SVR at Santander currently is 4.24% I think. But in 3/4 months time who knows....

IanIan

I'm on the same deal - 4.84% ending in June. From 1st July I'll be on base + 0.99% and I don't have to pay a fee. If base rate is unchanged, I'll be paying 1.49%. I'll be quids in! I can afford to do nothing. All the time that the base rate is 3.85% or lower, I'll be saving money. When base rate does go up, it'll probably be in 0.25% stages, so will take 15 months to reach 3.85%. In 15 months' time, my mortgage will be lower, so I'll be able to absorb a base rate above 3.85% and not be any worse off. I have been thinking about over-paying, but I'll put the cash into my monthly savings account at Norwich & Peterborough, which pays 5% before tax.

8LUNNST

Interesting that some of you are on base + 0.99%. Does it specify that in your mortgage details, or did you ring them to confirm? I assumed that I would revert to whatever SVR is published on their website. Unless our current fixed rate deals are not identical....

dunstonh

Andy, true - I think on average the lenders currently borrow at 3%.

It depends on how they finance the deal. Many will involve institutional investors or even a tranche of fixed term deposits.

With rates expected to rise, then long term fixed rate deals will involve them obtaining finance that reflects that.

Spangled

Although the rate Santander are offering you is maybe not so good as other banks, there is some value in having a hassle-free switch to a new deal with them. For starters, we've all read on this board tales of the nightmare that some people have had with remortgaging elsewhere. More importantly, if you're in negative equity, have a poor LTV or have a reduced income since you took out the mortgage, then taking a new deal with Santander - which won't go through the underwriters again - may be very useful.

But certainly the first thing to check is the reversion rate at the end of your current deal. If it's BoE +0.99% (which is the same as the lifetime tracker I'm on) then I'd absolutely stick to that (depending on your attitude to risk, of course).

Stroller133

8LUNNST wrote: »

. Does it specify that in your mortgage details, or did you ring them to confirm?

I hadn't looked at the details to be honest, but called the other week to discuss deals available when the lady said the follow on rate was BOE + 0.99%.
I had not stored this in my memory as in 2006 this rate would have been more than the fixed, so in my mind the obvious plan was going to be take a new fixed. I probably also thought our 10% equity would be about 30% by now as property values were increasing by +10% each year!

Gorgeous_George

If it reverts to BofE +0.99% it sure explains why Santander were so thoughtful in offering you a fixed rate and the option to exit early.

GG