Clever people's opinions please

dagrowler

OK so... just over a year ago i bought a house alone for 99,000 on a fixed rate at 4.69% for two years which expires on 01/01/2008.

I'm now selling this house and buying a new one for which i need a mortgage of 155,000, i think i have two(or three) choices.

1. i leave the 99,000 on the fixed rate till Jan and take out the new loan on their new fixed rate (currently 5.89 i think) for 2 years and they never catch up with each other...

2. I leave the 99,000 on the fixed rate and borrow the new amount on the standard variable (which is 6.69% and hopefully has no tie ins) and then get it all lumped together on a new lovely rate in Jan.

3. curl up in a ball and cry...

i think number 2 sounds best at the mo as our house won't complete til May/June time, but are there risks etc? I'm so confused.

MortgageMamma

Number two without a doubt

Regards

Clever Person with opinion

Rick62

No 2, but rather than SVR does your lender not have a discount (eg Tracker) with no Early Repayment Charges?

dagrowler

oh brill, see i wouldn't have know to even ask that.. I'll find out.

I'm trying to explain to my boyfriend, who knows slightly less than i do about mortgages, why number 2 is a better option. He's worried that the reason I'm leaning towards number two is just for ease (ie not having to have two mortgages on the go).

He's not sure we should do this in case we can get a great fixed rate on the smaller (second) amount.

can anyone put it into simple terms for me to explain to him... or even do some sums?

thanks for your advice already!

dagrowler

oh, also on their fixed (graduate) rate they said they'd pay for £150 towards survey and £250 towards legal fees. does this make a difference?

PoorDave

Have you spoken to your existing lender to see if they can "help"?

If you're planning to stay at the new house longer, what about a 3yr fix on the new mortgage, then 2 yr when you remortgage the existing one? Does your existing lender do a 3yr?

dagrowler

hmmm, interesting... but they still wouldn't coincide would they? because my current one is up on 01/01/2008 and then this one would be like 01/06/2009 or something? or am i wrong?
I'm considering option 3 now

dagrowler

ok clever peeps... Just spoken to scottish widows.
They offered me two options if i went for their variable thing...

1. Base rate tracker - 5.6% with a £499 fee
2. 3 year stepped - 5.69% with a £199 fee

Bearing in mind i'd only be on this one for about 6 months i havent detailed any of the other changes to the tracking.
i've done a bit of working out based on what the lady told me... (assuming its for 6 months and interest rates stay the same)

BR 3Yr
1st payment 859.33 861.16
5 payments of 837.91 839.64
total 4,189.55 4,198.20
plus charge 499.00 199.00
= total payments 5,547.88 5,258.36

so i think 3 year stepped sounds a good option...

Rick62

No. The 2 products you mention both have ERCs.

Take the extra £56,000 at the SVR of 6.69%, the extra 1% interest will cost you about £400 max. Then next January put the whole lot on a new product.

Anything else will finish costing you more, maybe thousands.

dagrowler

urgh really? when i asked they said they didnt... yikes. might ring em back!

dagrowler

OK I've just spoken to them, they said that if i was to lump all my mortgage together in Jan, which is what I'm aiming to do, and stayed with SW i wouldn't be charged at all.
If i was to move to another provider at that stage I'd be charged 2% on the new amount (around £58k).

if i went on the standard variable am i right in thinking that means I'd just be able to move to anyone in Jan without any charge? this might be better as its only for a couple of months anyway...