Remortgage or not?

xxSaffronxx

Im currently with C&G and on a variable rate paying £410 per month.

My LTV is 43%

I noticed last week that HSBC have a 60% LTV offer to fix it for 5 years at a repayment of around £420 per month.

I thought maybe it was worth doing, so proceeded with the application.

However upon speaking to them yesterday, the mortgage fees mean that they want £249 up front for the mortgage, and also £199 for the Valuation, which I cannot afford as I was hoping to add all these onto the mortgage.

I told them I would like to think about it before continuing.

Would it be silly of me to fix my rate at this time?
The only reason I wanted to do it now is because our income will be lower after xmas as I will be on maternity leave and i wanted to guarantee us low rate & mortgage repayments each month

harvey115

I think you should take advantage of the HSBC rate if you can get it as soon as possible.

Looking at the market although it may be impossible to predict the future but from where I stand I do not see any other deal matching that rate for such a long fix. However if the upfront fees is an issue, you may try other lenders with no/less fee.

If you post your current financial details (i.e. house value, mortgage remaining etc.), I am sure someone will be able to point you to the right direction in terms of which deal would be best suited.

xxSaffronxx

Thanks Harvey.

At present HSBC are the only ones offering that low rate. TBH I cant see anyone getting lower than that really. Although in a few months there may be other lenders offering the same rate but hopefully lower fees.

My financial details are:

Value of Property: £210,000
Outstanding Mortgage: £90,000
Mortgage Term Remaining: 25 Years
LTV: 43%
Current Mortgage Repayments: £410
Current Mortgage: Variable with C&G

kingstreet

Only you can decide if a fixed rate at this point is right for you.

You are giving up 2.5% variable rate with C&G for a higher rate and have to pay fees. If the stability of knowing your payments for the next five years is worth that to you, go for it.

Look at other deals where there are no transfer fees. It looks like your mortgage isn't very big and a slightly higher rate with no upfront fees may be better for you.

xxSaffronxx

Thanks Kingstreet

Its just im worried about the rates shooting up once I go on maternity leave. And if they do, then I am stuck and will have no choice as I wont be able to remortgage at that point due to my lower income

Any thoughts on rates over the next few years would be appreciated. I know its a bit of a silly question though

xxSaffronxx

Ok just looked again and HSBC do a fee free 5 year fix for £450 per month which is £40 more per month than im currently paying.

Overall cost for comparison over 5 years:

With Fee £27,094.80
Without Fee £27,365.20

Difference of £270.40 over 5 years. Monthly repayment difference of £40 over 5 years is £200. Total £470.40 over 5 years which still works out better and I dont have to find the upfront fees now, and its spread over the 5 years.

So it appears that it might be worth doing as it definately less than paying upfront fees of £500!

Am I missing something or does everyone else think it might be the right option to go for?

Morgage_Confused

You are correct in that the fee free deal is cheaper by about £260 over the 5 years.

Personally I would use the extra £40 per month and overpay your current mortgage and save yourself the headache of applying to HSBC. Bear in mind its 1% more than you are paying now. How long is it gonna take the base rate to rise by 1% in this economic climate.

It used to be said the interest rates can only go one way from here (0.5%)....but maybe that isn't so true.:j

martinsurrey

xxSaffronxx wrote: »

Ok just looked again and HSBC do a fee free 5 year fix for £450 per month which is £40 more per month than im currently paying.

£40 a month for 5 years is £2,400, not £200, so £2700 more over the 5 years IF rates stay the same, if they go up it could work out cheaper.

More than that, you are going into a period in your life when piece of mind will be woth more than money, is knowing what your mortgage will be in 4 years time so you can plan today worth the extra cash it could end up costing?

Morgage_Confused

The OP was referring to the 200 quid being the difference between fee free and the 1499 fee mortgage from HSBC over the 5 year period.

martinsurrey

Morgage_Confused wrote: »

The OP was referring to the 200 quid being the difference between fee free and the 1499 fee mortgage from HSBC over the 5 year period.

no she wasnt

xxSaffronxx wrote: »

Ok just looked again and HSBC do a fee free 5 year fix for £450 per month which is £40 more per month than im currently paying.

...

Monthly repayment difference of £40 over 5 years is £200. Total £470.40 over 5 years which still works out better and I dont have to find the upfront fees now, and its spread over the 5 years.

So it appears that it might be worth doing as it definately less than paying upfront fees of £500!

Am I missing something or does everyone else think it might be the right option to go for?

I belive she multiplied the monthly difference by the number of years, and didnt then multiply by 12 for the number of months per year

xxSaffronxx

Sorry guys I calculated wrong - i did £40 x 5 rather than £40 x 12 x 5!

Ooops!

With that in mind, its going to cost me an extra £2404.80 over 5 years than it would if I were to stay on my variable rate.
Perhaps overpaying my mortgage by £40 per month might be the better option then.

I might be wrong but I wouldnt have thought rates are going to shoot up quickly over the next couple of years