mortgage moving

dean785

Hi. I am changing mortgage company because my mortgage has gone up and a mortgage advisor has found us a better deal. My current mortgage has a tie in for 5yrs and will cost £5000 to change. This is a very high fee as you can see. Is there a way around this fee? I am changing from a intrest only to a repayment. I have had my mortgage just over a year now. Please help.

Thanks

Dean

herbiesjp

Are you sure it is worth your while to change? That is a high fee to pay

MarkyMarkD

No, there's no reason why you can avoid that fee and no way you can.

Presumably you've had a very deep discounted rate for a year, and now don't want to pay the higher rate for the next 4 (or 5) years of tie-in?

Didn't you work out, when you bought the mortgage, that the whole reason that it was so cheap for the first year was because you had to stay for 5 (or 6) years?

Unless your advisor has worked out that the total cost over the next 5 years (and I MEAN the total cost, including PAYING the £5k penalty not just the impact on monthly payments of adding it to the loan) is cheaper than staying, then you shouldn't remortgage in your situation. And it's VERY unlikely that it will be worthwhile paying a £5k penalty and remortgaging.

Would you care to set out:

- the rate you will be paying for the remaining tie-in period, and whether that's fixed or variable, and whether it's 4 MORE years or 5 MORE years
- the rate of the remortgage product your adviser is recommending, and the fees associated with it, and how long that rate is fixed/discounted for?

Then we'll be able to accurately tell you if your adviser is an idiot or whether you indeed should switch. But my money's on the former.

david29dpo

100% correct. i spent all of 10 minutes doing my calculations on a 3 year discount deal with a £499 fee and was much better off. i pay all the discount back if i change in the 3 years. simple. i am stuck with it for 3 years, that was my chose. nobody held a gun to my head when i signed. get the picture?

dean785

I am paying £500 a month on a £88k mortgage. virable rate, interest only. I had interest discount for 3 yrs, dropping 1% each yr. so nexy yr mortgage goes up again (not to mention intrest hikes before then). The advisor we have spoken to (not same advisor who got us the mortgage) managed to find us a reoayment mortgage, fixed rate for 2 yrs for £460.

MarkyMarkD

How much did I know that this (obviously useless) adviser was working it out based on monthly payments?

You still haven't answered my questions, so I still can't tell what the real figures are.

But, based on what you've said so far, £500 a month on an £88k mortgage is around 6.8%. Even if your rate increases from that to a "normal" lender's SVR rate of around 7.25-7.39%, that's not a huge increase from what you are currently paying.

The £460 a month works out at 6.3%. That's a completely rubbish two year fixed rate. Or maybe it's only 5.9% because of adding the £5k penalty onto the loan? Even so, it's still poor.

How can it possibly be financially worthwhile to pay a penalty of £5k to save £40 a month for 2 years i.e. £960? Or, maybe, around £2k if the current 6.8% isn't the rate you are actually likely to pay for the next two years?