Confused about remorgage!?!

reedi

Hi all.....Im all confused about remorgaging?!

Let me start at the beginning....(ill try not to waffle!)....

....Im looking to remorgage because Id like to take out some equity for home improvements (Im currently the proud owner of the worst bathroom ever! ;D) and to pay off a car loan....here's my setup so far:

Current morgage:
Abbey - £62k - 4.59% fixed till April 05
Indemnity fee =£630

Im looking to swap now because basically I want to reduce my monthly outgoings by getting rid of the car loan.....therefore I dont mind paying the £630 ( a remorgage with them wasnt very appealing)

So anyway....I did what Martin suggested and rang round the various brokers leaving London & County till last as they charge no fees. (Nice man at Charcol, but they want 1%, the guy at Chase was arrogant and rude I felt so Im not bothering with them)
The nice folks at London and County came back to me with...

Lender: Woolwich - 4.89% (1.90% discounted for 2 years) for £72k, with no fees

Ive got 62k to pay, flat valued at 85k, so want to borrow 72k.

This sounds appealing because Ill be saving around £95 a month......however....

Ive just been surfing myself for morgages and found MoneyFacts came back with these amongst others, on a 72k morgage:

Northern Rock: 2.89% Fixed for 2 yrs - Fees are just over 1k

West Bromwich BS: 2.99% Fixed for 2 yrs - Fees are around £750

Now I gather London & County didnt find these because they were looking for a no fee lender.......but now Im in two minds as to how to proceed. Although these 2 above have fees, the monthly payments are going to be saving me up to £195 a month......and granted Ill loose some of my equity money on the fees, but Ill gain that back on monthly savings right?!

The recommended Woolwich one has no fees but the monthly payments are more that what Im paying now for my 62k...but still saving me about £95.

So Im wondering what's best to do here?....pay fees - loose some equity money and pay less and save more a month.....or not pay fees, take most of equity money, and pay more and save less?!

Any advice/input appreciated!

Thanks

Andy

lisyloo

Northern Rock: 2.89% Fixed for 2 yrs - Fees are just over 1k

West Bromwich BS: 2.99% Fixed for 2 yrs - Fees are around £750

I would certainly check with these whether there is any "overhang".

An overhang means that there are penalties which last longer than the deal.
e.g. deal for 2 years, penalties for 3.

This means that for the 3rd year, you'll be paying a high rate on their SVR so it's a false economy.

I would certainly check this out because the rates would indicate to me that there is some sort of overhanf.

reedi

ic...this seems to be the northern rock one from their site......doesnt give much info though!

http://www.northernrock.co.uk/html/mortgages/generic/mortgage_prod0100.asp

lisyloo

The early repayment fees are

Two Year Fixed
(2.79%)
5% until 01/10/2005
9% until 01/10/2006
8% until 01/10/2007
6% until 01/10/2008
5% until 01/10/2009
3% until 01/10/2010
2% until 01/10/2011

This means that after 2 years you will be paying a much higher rate but will be tied in with penalties for a whopping SEVEN years.

So 5 years of high rates.

I would avoid this one and personally I would avoid anything with an overhang.

harrymac_3

some advice please.

I have came to end of my fixed rate mortgage and have a £1350 redemption fee for the next 2yrs. the svr is 6.74 - mortgage bal is £54k. should i pay the redemtption and re-mortgage or wait for 2 yrs-
any ideas

lisyloo

OK, you need to save at least £675 per year to make up for the penalty.

This is 1.25% of £54K.

Therefore you would need to find a rate of 5.49% or better to make it worthwhile.

You should be able to do that.

Remember to also factor in remortgaging costs into the equation, but you still should be better off remortgaging.

Nationwide for exmaple offer a 2 year tracker for 4.79% providing you don't have a high LTV.

harrymac_3

Thanks for the advice,will check out nationwide web site.

Mortgageman

Now I gather London & County didnt find these because they were looking for a no fee lender.......

Not exactly true. We are a no fee broker - that means the we do not charge a fee for the service we provide. However, we do not automatically discount any lenders that charge a fee - instead we will take fees in to consideration and come back to you with the deal that works out as best value over the term of the deal.

The reason we discounted the two products you mentioned is, as lisyloo mentions, overhanging penalties. If you see any products that you think might be better than the one your adviser reccomended, then give them a call to ask why. This is a good idea because there is always a good reason for the product not being reccomended - once you know the thought process that has gone in to discounting the product you can then make up your mind if that is right.

MM

reedi

ohhh i c morgage man.....well I must admit Im impressed with your service over the rest I rang.....so Im just going to run through what you guys offered me with the family and get back to you.

(I thought that 2.9 fixed was too good to be true!)

mpsavuk

I can never understand why people want to use a remortgage to pay off their car loan? This really is the most expensive way of paying off a loan on something that depreciates really quickly. 10 years later you are still paying off that car loan and you got rid of it 5 years ago!

Thriftwise

Why have you replied to a 4 year old thread??? :question: