Remortgaging - what to do if you have two mortgages running parallel?

VNadarajah

Hi,



Wondering if anybody can suggest the name of a reliable mortgage broker who can help me with the following situation:

• When we bought my first house in 2005, we took out 2-year mortgages from different lenders and ended up switching in 2009 to First Direct (with an offset mortgage at 2.89% that ran until Sept 2011)
• We bought our current house in Sept 2010 and ended up going with FD again to avoid early repayment fees on the original mortgage. However, FD provided the incremental amount at 3.29% on two-year offset mortgage running till Sept 2012. In other words, there were mortgages running in parallel, one at 2.89% and one at 3.29%
• In Sept 2011, I renewed the original mortgage at a rate of 2.89%. So far so good.
• Now the second mortgage is up for renewal, but the best rate that FD is offering for two years offset mortage is only 3.29% (and longer period is more expensive). Given my total LTV ratio is only 51% and the second mortgage is only 19% LTV I expect that I should be able to get a better rate than that surely?
• The other thing is that because of family commitments I'd like to get a five-year fixed rate so that I can budget / plan for a longer timescale than just two years. FD don't offer five-year rate on offset mortgages and tell me that any switch to a repayment mortgage will trigger an early repayment charge on the first mortgage.
• I'd like to switch to another company that offers a decent five-year rate but can deal with this two-tranche issue (don't want to unnecessarily incur early repayment charges)

Any ideas on how to proceed?

Vasi

beecher2

If you switch mortgage provider, you'll have to pay the Early Repayment Charge. When is your 2.89% deal up? Can you leave the second part on the SVR until you no longer have an ERC to pay and then move?

VNadarajah

Hi Beecher2 - The 2.89% tranche runs until Sept 2013. I thought of doing running on SVR for the other tranche till then, but FD's SVR rate is 3.6% so not sure it makes sense.