Is it worth paying early redemption fees to get better rate?

Thrugelmir

tallmum wrote: »

Looking around now (as I probably should have done months ago!) there's a fee free HSBC lifetime tracker of bank rate +1.89% (with option to switch without ERC) - I suspect this must be an improvement for me (looks to be better than the longer term Nationwide rate as well)

This is one of the best rates on the market currently. As the HSBC are out to win new business. However they are choosy when processing applications. So you'll need an impeccable credit record. Unlikely this rate will be bettered. Once on it there'll be no need to remortgage ever again.

noodle

Thrugelmir wrote: »

This is one of the best rates on the market currently. As the HSBC are out to win new business. However they are choosy when processing applications. So you'll need an impeccable credit record. Unlikely this rate will be bettered. Once on it there'll be no need to remortgage ever again.

This is the 70% LTV rate isn't it? It's lower again at 60% LTV (by 0.2% IIRC). I'm wondering if, if I get to 60% in a couple of months, they'll drop my rate. One would suspect not, but I was delighted with how easy it was to move from my HSBC fix onto the tracker.. except for the somewhat bizarre requirement for me to pay my ERC by cheque, which neither I nor the HSBC person could fathom out.

I've had a grumble with HSBC over their calculation of ERC's on monthly overpayments - but overall I've been very impressed with their mortgage service from the very start. They've been aggressively priced for some time - as they're looking to get a good share of the UK market without having to buy up another lender. They're obviously only interested in secure customers, as their rates indicate, and they use a very conservative valuation model.. but you're right, if you can get in then it's a fantastic product.

Thrugelmir

noodle wrote: »

They've been aggressively priced for some time - as they're looking to get a good share of the UK market without having to buy up another lender.

Although a global bank around 18 of the countries it operates in are estimated to make less than £60 million a year in operating profit. However the UK is one of its most profitable. HSBC have money to lend. So where better than the UK. As you say on very conservative lending criteria. As with most things Asian they take a long term view of business.

tallmum

Well I've gone for it!

Nationwide could not (would not) offer me any alternative before my full 5 year period (-90days) was complete - I just have to bite the bullet on early repayment (3% not £3k!)

HSBC have completed the on-line paperwork to progress the 1.89% + base rate fee free tracker. I will be paying less per month for fewer years (even including the ERC in the loan) with HSBC - with the option to transfer to another mortgage at any time.

Thank you to those who have responded to my post, and also those who've responded to other posts which gave me the nudge to make a change.
:beer:

Thrugelmir

tallmum wrote: »

Well I've gone for it!

Nationwide could not (would not) offer me any alternative before my full 5 year period (-90days) was complete - I just have to bite the bullet on early repayment (3% not £3k!)

HSBC have completed the on-line paperwork to progress the 1.89% + base rate fee free tracker. I will be paying less per month for fewer years (even including the ERC in the loan) with HSBC - with the option to transfer to another mortgage at any time.

Thank you to those who have responded to my post, and also those who've responded to other posts which gave me the nudge to make a change.
:beer:

Do come back and let us know both your experience and the outcome of your application. .

uzubairu

We were on a 10 year fixed rate 4.79% with Nationwide (ending June 2016), and the thought of paying an ERC was not something we gave much thought to because we didn't think that it was ever beneficial.
Last summer we paid the £2K redemption fee and re-mortgaged with First Direct when they reduced the booking fees to £99.
We did have an LTV of less than 65% so we got the best available rate.

The reduction in booking fee made a big difference in us switching to BR + 1.79% lifetime tracker.
£290 monthly interest soon became £135.

We did loads of calculations, and weighed up the pro and cons (e.g unlimited overpayments, no exit fees or ERC) and we reckoned that it would take slightly longer than a year if rates stayed low for us to recoup our redemtion charge.
We also had the opportunity to save as much overpayment money as we wanted elsewhere (getting a better rate).

The clincher for us was the combination of our improving LTV and the reduction in the booking fee.
It looks like the decision we made has worked out for us, because in September we will be in a similar position to moving onto the Nationwide SVR, without having to make another 5 years worth of payments to get it.

tallmum

Thanks Uzubairu - I've also opted to take the pain of buying out of existing deal in the hope that I will be better off in approximately 14 months time - the HSBC deal is totally fee free and I will have the flexibility to overpay and also to switch to a fixed rate without penalty if I wish in the future. I guess only with hindsight will I know hwether it was the right thing to do!

tallmum

:T

Update on my experience of HSBC tracker has been overwhelmingly positive! Able to complete most of the application process over the phone (took about 1 hour) and had preliminary acceptance - followed up with documents sent to home for signature (arrived promptly)...only downside was having to go into a branch to prove ID (didn't want to send my passport away!!!!)....but even that went smoothly. Received telephone call from underwriters this morning and told all cleared....just waiting for formal offer and indicative timing for mortgage switch.

So - in summary has been very straight forward, required very little effort from me and should put me onto a much better mortgage package than currently on!