remortgage questions

lynsayjane

hi guys, this is my first post over here, normally i live in dfw land!

my current mortgage rate has just ran out and as of december goes to the abbey's standard variable rate. i was on a very generous tracker with them for the past two years. prior to that it was fixed rate with the bank of scotland.

to be honest i understand only a little about these things. my uncle advised a capped rate through northern rock (he knows what he's talking about), i looked at their website but got very confused with all the numbers and what to look at.

i was thinking of going with an independent financial advisor (like last time) but thought i'd ask the advice of the wise peeps on here before i do anything rash!

cheers x

MortgageMamma

Hi Lynsayjane

What is it you are looking to do with your mortgage, I mean, obviously you don't want to go on to Abbeys SVR, but are you looking for certainty your payments won't get out of control due to the past two rate rises?

lynsayjane

hi mm,

it'd be nice to know my mortgage payments wouldn't skyrocket yeah, it was my uncle that advised a tracker last time and i think it only went up once in that time, i guess if he's advising a capped rate one he thinks rates will rise. he also said not to get tied in for more than a couple of years. i guess that makes sense anyway.

i'm only 25 and have been here just over five years now. my current mortgag stands at 31k, i would ideally like to take extra to put central heating into the place. when i last remortgaged it was valued at 48k and i know prices have gone up here so i don't forsee problems releasing a little equity. i might consider increasing the term (currently 20 years left) if it kept the payments down a little, once i'm debt free (less than a year i hope) i'll start saving and hopefully consider overpaying on my mortgage, but i dunno if it's worth doing at my age?

MortgageMamma

its always worth overpaying whatever your age - wouldnt it be great to be mortgage free?

First thing you have to do here is, and it sounds harsh - stop taking mortgage advice from your uncle. I know he means well, and possibly is quite experienced having had plenty of mortgages himself, but, nobody does it better than a good mortgage broker.

A capped rate is an option but it does restrict you massively as there are not a lot of them on the market. Theres nothing to worry about regarding getting tied in to a fixed rate - IMO as you have a small mortgage a fixed rate (3=5 years) with no arrangement fee and no legal fee's would be a good option for you, affording you the protection from rate increases you desire and also a good deal of time with one lender allowing you to truly chip away at the capital balance (the more you move mortgages, with added fee's and the fact that most mortgages load a higher proportion of interest at the front of the mortgage i.e. first few years means its not always wise to switch deals so often).

If you had a flexible mortgage, in that you could overpay to reduce balance further, and possibly use those overpayments if needed to take a break from paying the mortgage, to borrow them back or to reduce your payment amounts for a set time, together with the fact the mortgage would be portable i.e. transferrable onto another property if you move, I think you may find this worth considering.

lynsayjane

thanks mm,

now why can't mortgage lenders make their info so simple to understand?

i'll have a look at the yellow pages at work and find a broker tomorrow.

MortgageMamma

You would be better asking around friends family and colleagues if they know anyone to recommend to you - recommendation is always the best route - you could find a diamond broker out of the yellow pages or you could end up with someone terrible - really no way of telling (which I why I don't advertise in YP!)

Mortgages will never be simple, as everyones cirumstances are different so lenders create a product to match the need. Once you have been advised formally you will be much more comfortable with this, a good adviser will educate you, and help you make informed decisions - not sell to you.

When you look for a broker, make sure you ask about fees and whether they have access to every single lender on the market. If you have a browse on the mortgages section of the main site there is an article by martin lewis on the questions to ask a mortgage adviser, and how to find a good one!