Need urgent advice on broker fee

p_wallior

_Andy_ wrote: »

Why not just reduce the term of your existing mortgage?

How can I do that?
I have 18 months left on my fixed rate mortgage.
Effectively, I'm trying to reduce my term by making overpayments each month.

p_wallior

kingstreet wrote: »

I agree with the others. I was so busy being indignant at the broker's charges I didn't bother to look at the fundamental issue - is it worth it. It doesn't appear to be!

I'm confused.
If I pay £10 less a month, and reduce my term by 3.5 years in the process, is that not a good deal?
It sounds like I've been fooled by the advisor's selling techniques...

_Andy_

p_wallior wrote: »

How can I do that?
I have 18 months left on my fixed rate mortgage.
Effectively, I'm trying to reduce my term by making overpayments each month.

You ring up your lender and ask them to reduce the term (not of the fixed rate but the mortgage).

dunstonh

Their deal is a mortgage lifetime service with an upfront fee of £1890.

Avoid that model at all costs. It is an unsustainable business model for mortgage advisers to use. It will ultimately result in the company folding. Most of them do shut down sooner or later.

Advice on mortgages should be on a PAYG basis. Also, if you are paying for advice, then make sure it is independent and not whole of market (independent includes non-commission deals and rebates commission where there is some)

p_wallior

_Andy_ wrote: »

You ring up your lender and ask them to reduce the term (not of the fixed rate but the mortgage).

Is that not the same effectively as making overpayments?

p_wallior

Wh05apk wrote: »

This would only really be worth doing if you have minimal fees and you are happy to take a risk, your penalty is about 3%, the tracker offered will save you 3% (assuming rates do not move) so you will take a year to break even on the penalty, any fees/costs will extend the breakeven period.

If rates move, then you could easily be at a loss.

Thanks a lot, this point of view made me see this deal differently.
I've done some calculations, let me know if you think I'm wrong:

IF I STAY WITH FIXED RATE:
Outstanding mortgage: £94000
Interest over 18 months: £8220
Repayments: 18 x £765 = £13770

Outstanding after 18 months: £88450

IF I SWITCH TO TRACKER RATE (assuming rates stay as they are):
Outstanding mortgage (including redemtion and broker fees): £98000
Interest over 18 months: £4100
Repayments: 18 x £750 = £13500

Outstanding after 18 months: £88600

So basically, I've gained nothing even if the rates stay as they are!

If they rates go up, I'm worse off and tied to a tracker for a further 18 months.

If the rates stay low, similar deals should still be around and I can make my decision then.

Does my reasoning make sense?

Thanks for showing me the light! :T

opinions4u

Debt £94k.

Penalty £2,900.
Broker fee £1,900

Interest saving c3% a year = £2,900.

Looks like you'll break even at best over 18 months.

What's the SVR of your current lender? Leek have an SVR in excess of 5%. There's a risk of being stuck with them if the market freezes again at the end of your tracker.

I'd see out your current deal and then review things.

p_wallior

opinions4u wrote: »

Debt £94k.


What's the SVR of your current lender? Leek have an SVR in excess of 5%. There's a risk of being stuck with them if the market freezes again at the end of your tracker.

I'm with Nationwide, I think the SVR is currently 3.99%

betmunch

You should check with Nationwide on the revert rate, their older mortgages had a garentee not to be more then 2% above BoE Base Rate which they are still honouring.

p_wallior

betmunch wrote: »

You should check with Nationwide on the revert rate, their older mortgages had a garentee not to be more then 2% above BoE Base Rate which they are still honouring.

Really??? That sounds interesting. Thanks a lot, I'll check this out.
Would that be in the terms of my mortgage?
I took this fixed rate out in June 2008.