Remortgaging

Fizzipop

Hi, I would really like some advice please.

We are coming to the end of a two year fixed rate of 3.99 with no tie in with YBS.  The current loan is £123,000 interest only with in theory only 10 years left until our endowments pay off the loan.  Our house was valued at around £300,000 when we remortgaged 2 years ago.  

We are wanting to start a business at home and were thinking about toping the mortgage up to £150,000 with the extra being on a capital repayment basis.  YBS are doing a two year fix at 3.79 but there is a tie in of 3 years after that of BoE+1.75% until 2009.  It looks as though the cost of going elsewhere would be too great to achieve any saving but I am worried about the cost going up dramatically after the fixed period.

Also should we keep the term of the whole mortgage (£27,000 captial and £123,000 interest only) to the 10 years or extend it out to reduce the short term cost to us as we are likely to have slightly leaner periods during the business set up time.  

Your views would be much appreciated

martinhp

personally i advise any of my clients to stir well clear of any deals with extended tie ins. In the last 6 years only one client went against my advice.. and really regretted it 2 years later.

The trouble is you have been spoilt by a very good mortgage rate. I am on the same rate and mine runs out next march. I think you are best 'biting the bullet' and picking a deal with no extended tie in. Maybe put the extra bit on interest only.. just for now, until your business is up and running. Then change it back to repayment