Remortgage Options

Hyp3rion

Hi,

My partner and I currently have a mortgage with the Halifax and we are on their SVR.
Our house is worth approx £215 - £225k and our mortgage balance is £150k, we pay £939 per month.

We are considering making overpayments on our mortgage of £500 every month but I have yet to call Halifax to find out if this is possible. But in addition to this I was wondering if we should also be looking to switch to another lender? A quick search shows that I could reduce my monthly payments but still keep the same mortgage term (19 yrs) but I'm not sure if it makes sense to do this. Also, are there any lenders who are more willing to accept overpayments than others?

harvey115

Usually when you are on the Lender SVR overpayments are allowed, but you need to check your KFI and other documents provided by your lender when you got the mortgage.

If you can find better rates elsewhere you are better off re mortgaging then staying with Halifax. However before moving on, you should ask your current lender (Halifax) if they can offer any deals to you that would keep you their customer.

Jimbo1976

If you are on Halifax's SVR then you should be able to repay as much as you like without penalties.

You should check to see if there is any minimum lump sum reduction amount, some lenders have an arbitrary figure such as £1,000 so if thats the case you would need to save up for 2 months before making a payment.

There are plenty of remortgage rates below Halifax's SVR. Most lenders will allow overpayments on their new fixed rates and tracker but these are typically limited to 5-10% of your balance per annum. But this should not cause you problems given the figures you are proposing to repay each month.

Hyp3rion

Thanks for the replies guys.

I just called Halifax and they have confirmed that I can pay as much as I like without penalty as I am on the SVR.

I take it that overpaying is the right way to go rather than embarking on something like an offset mortgage and placing the £500 per month in an offset account? We do not have any other savings to offset.

Are there any recommendations for lenders who are good at the moment? My partner bank with HSBC and I am with First Direct.

Jimbo1976

Offset tends to work well if you have a lot of savings compared with your mortgage balance. Typically offset mortgages are more expensive than simple mortgages. You get much more flexibility but that comes at a price. With an offset if you need the extra money back you just take it out of your savings account whereas trying to redraw overpayments is harder and slower.

Based on the figures above and the fact that you don't have other savings I would probably go for a normal mortgage rather than offset.

As to choice of lender, that's a tougher one. The 2 you mention have very low rates but are extremely picky about who they lend to. If your situation isn't complex and your income is easy to prove then its worth trying but it is better to set your expectations low. If you have 10 minutes or so look through the previous few weeks of posts and there are plenty from people who couldn't get a mortgage from those 2 lenders.