Is This Possible???

pink123_2

hello to all, I would really like some advise on this matter from any one out there. I appologise in advance if I dont use the right terminology as I am new to mortgages etc.. I have a mortgage offer with a lender. property I am buying is £213,000 mortgage offer £186,761 (they took mine and partners student loan in consideration). However, this is 6% cashback offer therefore will receive a cheque for £11,205 ( will pay of all our debts:beer: ). What concerns me is that the APR is 6.84% fixed for 5 years- IO payments £1068 pcm. The redemption penalty is £9372 if mortgage is payed early. My question is would I be able to , say in a few months, cancell and repay the redemption fee of current mortgage (thus being arond 2K better off and less monthly payemnts) and get another mortgage for £196000 with a lower interest rate?

nrsql

Have a look at the T's and C's.
Is there an arrangement fee or whatever?
You also have legal/admin costs.

I would be surprised if you came out on top by taking the mortgage and then redeeming almost immediately.

asandwhen

remember though at those repayments it is interest only and after the 5 years you will still owe £186761 - a repayment will be just over £1300 per month.

herbiesjp

What amount do you need to clear your debts?

Can you not increase the mortgage amount at the outset and get a lower rate?

What is your actual fixed rate for the 5 year period as opposed to the APR?

herbiesjp

What amount do you need to clear your debts?

Can you not increase the mortgage amount at the outset and get a lower rate?

What is your actual fixed rate for the 5 year period as opposed to the APR?

pink123_2

Good morning and thanks for all your advice. I will clear all debt with £10000. Sorry the fixed rate is 6.84% for 5 years. The idea is if I go and get another mortgage I can actually pay repayment for the similar amount that I am paying IO with current lender. Legal fees are £250. Is it a good idea to change lenders and also what would be the implication on my credit score, getting a new mortgage so quickly?

HelpWhereIcan

Sorry, but the Chelsea have already thought that you may do that. They will also want their cashback repaid if you redeem your mortgage in the first 5 years.

You would therefore pay 11205 + 9372 = 20577, so you would be at least 9372 worse off rather than 1833 better off.

One way to use this scheme to your advantage would be to redirect the money your are currently paying each month towards your loans to the mortgage as an overpayment. This will reduce the balance of which you are being charged interest over the 5 years - a higher rate of interest but hopefully on a lower balance that you are repaying quicker.

Do the sums to see if this will work for you.

pink123_2

Hi HelpWhereICan. thanks for your post. You are probably right but it is not mentioned in my T&C so are you definately sure?? All they say in T & C is that if mortgage is to be repayed early I will incur charges of £9372 and no mention of the cashback. Is it because it is a general understanding that you have to pay back the cashback without having to mention in T & C?

UK007BullDog

You will have to repay the cashback. The amount will depend on the length of time you had the mortgage.

Otherwise everyone would get a cashback mortgage. So HelpWhereIcan is right.

pink123_2

thanks for all the advise, I just wasnt sure so I wanted some clarification.