bit of advice please

pennyy's

Hi folks

looking a bit af advise please, though like many q's here i suspect there is no easy answer

i have an existing mortgage of £70,000 at fixed rate 4.75 which still has two years to run. I have been told by lender redemption penalty is £1600 to leave now

i am about to move house and take additional £30,000 borrowing at 5.34 fixed for ten years (still undecided about length of term). £300 set up fee

i am considering moving the larger balance of 70,000 accross on to the same 5.34 fixed rate & pay the £1600 penalty, though i will only pay same £300 fee (& avoid further fees when 4.75 deal runs out!). Do you think this is a wise move?? also regarding the redmption penalty, is there any to avoid or reduce this 1600 amount?

its anybodies guess how interest rates will go, though seems to be an upward trend in the immediate future & the suriety factor is appealing . what do you think?

toonfish

you'd be better looking for a 2 year rate on the new funds I think - otherwise you're paying a penalty for increasing your pay rate! General opinion would suggest that rates may rise again but are likely to be on the way down again in 12 months time.

herbiesjp

ARe you staying with the same lender and porting your current deal?

MortgageMamma

Who is the lender and have you gone directly to them? you would be better speaking to a mortgage broker and letting them do the maths

pennyy's

cheers folks

lender is nationwide & yeah am porting mortgage. have chatted with them but they simply present the facts and let you decide. as suggested may chat to a broker

appreciate that i am paying a fee to increase payts (which sounds strange) but, as is the primary adv of any fixed rate, its the knowledge that longer term payts are affordable. Hadnt heard that rates may well come down again in a years time but will ceratinly consider, where can i check for further info?

what about the redemption penalty, is this definately fixed at £1600, or again should i chat with the lender? any hints on how i should approach the topic with them?

firesidemaid

hi there

have you talked to nationwide face to face about this?

your current rate is a very good deal. i take it that you have to move house?

i would speak to them and ask a) whether you can port/move your mortgage from one house to the other and b) if you cannot keep the rate that you are on currently, if you stay with them that they could not penalise you for your move

pennyy's

hi, yeah good deal & still 2 yrs to run but longer term certainty appeals.

i am porting the larger portion of the mortgage and can keep at 4.75 if i want, though would have to pay set up fees in two years time when this runs out- was thinking, if rates are going up long trem, may take the hit now on redemption penalty & fix all at 5.34

SantanderAbbey

Also think about any potential downsizing in the next ten years, i would expect that the 10yr fix has a very large penalty probably approaching two years interest if that one was to finish early, remember when you took the last one out and the situation you are in now, 10 yrs is a long time.

As far as getting any of the penalty waived, most lenders will waivee some of it it you moan for long enough, your making a ten year committment to them so push for it.

Some lenders also have Switch and Fix schemes, where they will waive the ERC if you transfer onto a new fixed rate having more than a year to go on the current tie in. I dont know whether Nationwide is one.

pennyy's

Thanks for that SantanderAbbey, that Switch & Fix scheme is something i will certainly look into