Some advice please

doc2009

Current 5 yr fixed rate due to end in September.
Received letter from Santander yesterday saying that variable rate I will move to is 4.99% and payments of £288 a month. Currently pay £317 pm.
I believe I owe about £38000 and a house nearby sold recently for about £80000. Have had mortgage for about 9 years and have approx 14 yrs remaining. I have read about trackers, offsets and other mortgages to the point that my head now hurts. One website showed that santander were offering a 5 yr fix at 2.99% for existing customers but i believe this means current account customers, not mortgage customers. Nationwideor HSBC had a similar deal but big fees. Could i have some opinions on what some more experienced readers would consider doing if in my position. Thank you for all opinions.

Jimbo1976

Firstly give Santander a call and see what they will offer you. They usually have what are called retention deals to try to hang onto clients like you who are coming to the end of the fixed rate period.

Once you know what it will offer you then you can compare with the rest of the market.

Be careful of some the extremely cheap 5 year fixed rates out there. These typically come with fees like £1,500. As you have a small mortgage these deals would be appalling value for you. Most lenders have a range of deals, some with no fees, some with medium (£500ish) fees and some with high fees. The highest fees get you the cheapest rates but you need to look at the overall cost over the 5 years. Eg if there is a 5-year fixed at 3% with a £1,500 fee and a 5 year fixed at 3.5% with no fee. By going for the lowest deal you would save yourself 2.5% (0.5% per year) on your interest payments. So that saves you £950 but you are paying £1,500 to do that so you are net £550 worse off.

Good luck

getmore4less

Jimbo1976 wrote: »

Eg if there is a 5-year fixed at 3% with a £1,500 fee and a 5 year fixed at 3.5% with no fee. By going for the lowest deal you would save yourself 2.5% (0.5% per year) on your interest payments. So that saves you £950 but you are paying £1,500 to do that so you are net £550 worse off.

Good luck

On 38k over 14 years 5 year fix A: 3% £1.5k fees B: 3.5% no fees.

£288pm after 5 years

A:£27,265.61
B:£26,401.59

Actualy net £864 worse off

doc2009

Thanks both of you for your input, here is where i am now.
Called Santander tonight and was given details of their deals. To be honest i am happy to go with another 5 yr fixed rate and so was offered this deal, 3.99% with a £499 arrangement fee and monthly payment of £272. I currently bank with Halifax so called them and quoted the deal from Santander. The gentleman i spoke to said that they had stopped doing 5 yr deals about 6 months ago, but he had just received word that they were going to launch a new 5 yr deal from tomorrow. He believes the rate is 3.69% and an arrangement fee of £265. He has taken my number to call me back on Monday as he is off tomorrow and he will hopefully be able to confirm these rates for me. As i am existing customer at Halifax then no legal fees. I think this looks a good deal for me, again, what are your thoughts. One final question, i have tried using various mortgage calculators to work out monthly payments. When i insert £38000 borrowed against value of £80000 at 3.69% for my remaining 14 years, it gives me an answer of £293 yet the renewal from Santander states 4.99% will be £288 per month. What am i missing or what detail am i inputting incorrectly. What period of time should i input for the duration of mortgage. Thanks again for any help or opinion.