First Time Remortgage Advice? (with a little rant)

Gareth83

I could drop to say 20yrs but thinking surely the longer the term the greater flexibility I have? So long as I overpay the end result will be the same?

Did the Woolwich check payslips, confirmation of work and so forth etc? As I have a salary but often get paid additional amounts + some self employment work

hcb42

yes of course it gives you flexibility, it depends on how disciplined you are, and how old you are of course. to me, the thought of 33 year term is depressing - in fact even 15 years is depressing! At the very least get it to 25yrs so it feels like a "normal" mortgage term...but 25yrs if you are nearer 40 than 20 or 30 is like a noose around the neck.

Yes, I think we had to give three month's payslips for me, plus P60 and bank statements. I would tend to think ad hoc payments wont count unless they are practically guaranteed and they are best out of equation. My wages did not go into their account so I had to provide bank statements too, but I am sure it was only 1 month's statement they wanted. I provided work contact details as did hubby, although I don't know that they actually followed it up, the evidence of pay was there.

mustang1

Yes you will get flexibility but it's dependent on you making the overpayments. I am not very good at that so would rather have a higher fixed payment so I don't fritter away the extra cash! I had to show my last 3 months payslips and bank statements. Affordability ignored any additional payments ( I rent my spare room out but they ignored that). I also have money on 0% credit card and a car loan but I was ok with their affordability calculation.

The main thing is the property valuation - you will need to make sure you are comfortably within the LTV band. I was on the cusp of the 75% bracket and was lucky I came into the 70% band. Still, I was happy with the higher LTV deal if that's what I ended up with as was still 2% off my existing deal.

kingstreet

I'd pick a term which gives comfortable monthly payments based on your lowest possible monthly income. You can then overpay voluntarily to reduce the term when you have extra income.

Thrugelmir

Gareth83 wrote: »

I could drop to say 20yrs but thinking surely the longer the term the greater flexibility I have? So long as I overpay the end result will be the same?

Could you afford the monthly repayments if interest rates reached 7%?

Current levels of interest rates will not last for ever. Over time will rise back to more normal levels.

Gareth83

what does the affordability at 7% have to do with anything? I'm looking to fix at around 4% but querying the term

Thrugelmir

Gareth83 wrote: »

what does the affordability at 7% have to do with anything? I'm looking to fix at around 4% but querying the term

Your currently on a 33 year term. Out of that period I would wager that a greater proportion of the time mortgage interest rates will be over 6% than below.

Your need to make a balanced decision with a long term view. A 5 year fix is short term.

So committing now to a 20 year term could result in a sizeable hike in repayments. Better to reschedule to what you can comfortably afford and make overpayments on top. Thereby giving yourself flexibility.

Gareth83

But I wouldn't be committing to a 20yr term would I?? Because I'd look to change in 2/3yrs anyhow.

I can comfortably afford the equivalent rental price of £550 a month. So I can either do one of two options:

1. Get a 20yr term for eg and just pay £550 a month
2. Stick to the 33yr term and pay for eg £350 a month but overpay by £200

Either way the mortgage would be cleared at the same time right ie 20yrs?

So as I said, what has an increase to 7% got to do with anything? I am looking at current rates and looking to fix for 2/3yrs

Gareth83

so which fixed mortgage is my best bet over 25yrs?

Amount - £82300
Value of House - £110,000 (probably £115)
Income - £20,900

Do I look at which would be cheapest over 25yrs and just change in 2/3yrs or look at what is cheapest over 2/3yrs as these ones seem to add £999 booking fees to end of mortgage. The moneysupermarket comparison doesn't quite show this clearly...

Need a bit of help really

kingstreet

Gareth83 wrote: »

so which fixed mortgage is my best bet over 25yrs?

Amount - £82300
Value of House - £110,000 (probably £115)
Income - £20,900

Do I look at which would be cheapest over 25yrs and just change in 2/3yrs or look at what is cheapest over 2/3yrs as these ones seem to add £999 booking fees to end of mortgage. The moneysupermarket comparison doesn't quite show this clearly...

Need a bit of help really

The amount you are borrowing means rate is less important than fees and set-up costs. If you are going for a two or three year deal, you won't save enough on the monthly payments to make it worthwhile paying fees.

Whether you go for fix or variable, look at the initial offer or the whole term, only you can decide.

In your opening post, you mention a two year fix. Having a look at the options, ING Direct's 3.45% fix to 30/6/2013 is probably your best bet. It combines the lowest rate and is absolutely fee-free - no valuation fee, no arrangement fee and your legal costs are paid for you. £436 per month over a 23 year term. 10% capital repayments permitted without penalty during fix. Standard rate follows on, currently 3.5%.