Re-mortgaging advice

rtw123

Hi there

Just looking for a bit of advice on my mortgage situation if anyone can help!

Been looking round the marketplace for good deals on mortgages as looking at re-mortgaging (currently with direct line £69k mortgage @4.99 fixed, due to expire next few months). Cheapest fixed rate I could find was with Yorkshire Bank (fixed for 2 years at 4.79). Not sure if there is some kind of catch as this seems really cheap compared to other fixed rates available at present. There is a £1200 arrangement fee and no assistance with legal/survey so would also have to pay these.

Also, there is no extended tie-in after the 2 years expire...

Anyone with yorkshire bank at the mo, or able to offer any comments on the YBS mortage? Is fixing for 2 years the right thing to do? Was also considering going interest only to keep monthly payments down but have been advised against this :rolleyes:

Thanks for any advice

UK007BullDog

You need to work out if the fee against the mortgage is good value for money, I find that fee quite high. It might be better to get a slightly higher interest rate and a lower fee or no fee or even one with free legal and survey costs.

herbiesjp

Sometimes it can work out more cost effective to go for a higher rate but with lower fees - especially ones that include free legals and free valuation

MortgageMamma

Have you not spoken to a whole of market mortgage broker? if you use a broker they can do these calculations for you. generally a higher amount of mortgage is better with a lower rate and a higher fee, and a smaller mortgage better with a higher rate and no or low fee's. The skill is in determining where the line is drawn and finding a mortgage product to match

rtw123

Thanks for the advice. Have been looking at staying with direct line as their fee is only £499 but their interest rate is higher than Yorkshire. Will have to work out which one I will be better off with including the fees in the calculation.

Can I just check if anyone would recommend interest only mortgages? When I enquired with direct line they didn't seem keen and said I would need some plan to run alongside it so I would have the funds to pay my mortgage off. However, I am only looking at going interest only whilst my daughter is in nursery so that I can afford the excessive nursery fees. Would switch back to repayment when she goes to school after the fixed term has ended. Also, I do have £90k equity, so I am not particularly worried about only paying the interest for the next couple of years anyway

Any advice again would be greatly appreciated and thanks for all those who replied to my previous message

herbiesjp

Interest only is fine as long as you are aware of the implications i.e. not paying any capital off via monthly payments.

Also you need to work out your strategy for repaying the capital and stick to it i.e. if you set up a savings policy you need to make sure you pay it each month and not stop the payments after a year or two

Or if as you say, you are going to convert to repayment after a couple of years, you must remember to do so, and not push it back further


Apart from that, yes you can do it, and yes there are lenders that will allow you to do it provided you meet their criteria

HTH

MortgageMamma

Some lenders will let you take an interest only mortgage without having a repayment vehicle running alongside it, but most will ask how you intend to repay. With these specific lenders all you need to do is put on the application form that you intend to convert to repayment once child is in school, or state repayment from eventual sale of property etc and they would be quite happy to accept that. Alternatively if you have a pension plan you could opt to use some of the tax free cash from that towards repayment. ISAs, Endowments, most savings accounts etc are also usually acceptable, so if you have one of these you could utilise it.

Some lenders stipulate that there should be a specific repayment vehicle in place and ask for evidence of it, for example saving account statements or an endowment policy document.

I still think you should have a chat with a broker, chances are there will be something available which is much more competitive than the direct line deal.

herbiesjp

Forgot to ask what Direct Line have offered?

rtw123

Hi
The direct line mortgage is 5.79 fixed for 2 years with a £499 arrangement fee. The YBS is 4.79 fixed for 2 years but £1200 arrangement fee, but will also have to pay legal fees etc