Stupid, stupid, stupid!!! Additional borrowing

sammyl79

Hi

I have made a complete mess of my additional borrowing application...

Our current fixed rate with Britannia is due to end on 22nd May 2012, we currently pay £680 per month.

Was looking into borrowing an extra £12k for home improvements and for ease I decided to stick with Britannia and was sold a Lifetime tracker rate @ 2.79% above the BoE BR with no fees, payments would be £595.75. We applied for this (after being told we would have the funds in 4 weeks) and all was going well until we were told that Early repayment would need to come out of the £12k (£2194 before end of may or £1097 after may).

Now I am worried that if I wait until end of May/Beginning of June for the ERC to reduce the bank rate might go up...

Britannia did offer us a 3yr fixed rate at 4.49% £999 arrangement fee for £681.44 per month.

Have also seen a good rate with Barclays, but guess I am now stuck with Britannia as they credit searched us for the lifetime tracker rate...

Really not sure what to do next... Any help would be appreciated.

Thanks
Sam

Thrugelmir

Why do you have an ERC after the fixed term ends?

sammyl79

Sorry, yet another mistake;the fixed rate ends May 2012...

kingstreet

sammyl79 wrote: »

Now I am worried that if I wait until end of May/Beginning of June for the ERC to reduce the bank rate might go up...

If you're going for a tracker, that's the risk you take. The fact you can't complete until May is irrelevant. If the rate goes up in April, you'll pay more. If the rate goes up in September, you'll pay more.

If you want certainty of knowing your payments will stay the same, the only option is a fix.

The issue about penalties is a red herring to the variable v fix debate.

Now, on to the penalty. I'm with Thrugelmir - why is there still a penalty if the fix ends on 22 May? Are you sure it's 22/5/11 and not 22/5/12 which is what is suggested if there's a higher penalty before and a lower penalty after 22/5.

This was posted before I saw OP's last post!

Thrugelmir

Why not borrow the additional £12k seperately and leave your existing mortgage as it is.

JSR

If the base rate goes up it's pretty likely the +2.79% part will come down on new deals. So the higher the base rate is when you take out the tracker the longer the deal will remain competitive and the better value you get for the fee.

kingstreet

Can you leave the current mortgage alone until May 2012 and get a further advance on standard variable rate until then?

At that time you can plan your whole mortgage for a future with Britannia, or another lender.

IMHO there's no point spending a grand or two on penalties in an attempt to save money on the rate.

sammyl79

Thanks...

Should I stick with Britannia and see if they can change my product to a FR (even though they had already gone through the application process and was now going through the processing department) or should I bite the bullet and change the provider altogether...?

Good_Money

are the two amounts as sub accounts?

so you would have the main mortgage fixed and the extra 12k on variable tracker?

my mortgage is with Britannia and on 3 different rates:

1.fixed to May 2012
2.tracking at base +1.49%
3.tracking at base +1.99%

sammyl79

Hi thanks for all replies

We don't really want to spend anymore than £700 per month, and after putting down a large deposit £50k against the property worth £175k we wanted to release some of it...

sammyl79

Hi Good Money

Yes they are down as 2 sub accounts but both are listed on the same rate/term...