Changing Mortgage, is this a good move?

Lady_K

Hi

I just wondered if anyone here thinks its a good idea to change to the Reward Product with Halifax, it seems to get lower as the years go on but are there any bad points with having this? I am on Halifax 6.75% standard rate at the mo but this reward one starts at 5.9% from May till July 2007 then down to 5.49% July 2009 then 5.39% till July 2011

Is there anything that I should be aware of with this? I asked questions but it's still a worry in case I've made a bad move. The lady said its better because it's cheaper and will always be cheaper... It's a 6 yr term but I can change at 3 years if I feel it's not working for me... don't know if theres a charge for that, I forgot to ask but there is no charge for changing from my present one to the Reward anyway

BigDunc

I couldn't tell you if it is still available but I am also a Halifax mortgage customer and got moved to a mortgage rate last year that was/is 6% free of charge. The rate still isn't brilliant but it cost me nothing to move.

I would be surprised if there weren't financial penalties if you tried to move before the end of the fixed rate term so you are tied to them for the next six years. As to the comment about it being cheaper, that depends on interest rate movement. A lot of the financial 'experts' in the media seem to suggest that we are close to the peak of the current interest rate cycle, if the rates start moving down again then so will mortgage rates. If we join the Eurozone and adopt their interest rates (currently a couple of percentage points lower than ours?) then a mortgage rate of 5.39% may be at the higher end of the market.

What sort of fees are they charging to remortgage?

Lady_K

There is no charge to change from the one I have already... I just hope Ive done the right thing

nh

Have you already signed up for this product? if not, see if you can go to see a independent financial advisor in your town/village, s/he will be able to go through the options with you.

Most mortgages have an arrangement fee, which can also include legal fees etc, it can cost upwards of £500 to move, but depending on your loan value, it may be well worth your while.

You can get a much lower rate than 5.9%, or even 5.39% - I pay 4.79% on a Nationwide tracker (tracks the BoE base rate), but you will have to pay an arrangement fee.

Are these Halifax rates fixed over the six years, no matter what happens to base rates? Fixing is good if you don't like risk - you will know what you are paying and when and will not be hit if base rates rise - but you have to pay a higher rate for that privelege.

If you have already signed up, is there a cooling-off period? Could you cancel the agreement to give yourself more time to make sure you have made the right decision. It is not something you should rush into.

Lady_K

well it says no charge for swapping although some of the other ones out of the 7 they showed me say its £199 arrangement fee. My mortgage has another 9 years to go... I don't know if it's gone through or not she said the account was locked. I spoke on the phone to halifax mortgages because I didnt want to decide at the mortgage review so I havent signed anything as yet. Its the lowest out of all of the ones they showed me apart from one at 4.99% and one the same but they are arrangement of £199... I just wondered why theres no charge for that one. Not sure about a ifa I think I have a free voucher for one for so long but I might be too late anyway, but I'm concerned about cost

Lady_K

There is a cooling off period plus I have to sign papers so I can change my mind.

Also I mentioned about if we go into the eurozone and was told that wont effect it coz its based on the bank of England base rates and it will always be below that by I think he said 2% but I cant be sure. There is no charge for swapping at 3 years and it's actually fixed dates making it a remainder of 2 years 3 months now of the first 3 years before I could change not the full 3 now. I can change anytime I like after that because after the first 3 years its not tied in

Doesn't sound too bad I don't think, it's better than the 6.75% I'm on now and looking though all my interest rate changes its not been below 5.59 anyway so maybe it's fairly safe to change to the reward one for the remaining tied 2 yrs 3 months(July 31st 2007)

BigDunc

Hmmm, I'm not sure how knowledgeable your contact at the bank is. The point about joining the Eurozone is that the interest rate is then no longer set by the Bank of England but by the European Central Bank. This is fixed for all EU countries and I believe it is currently at 2%. If that were to happen then variable-rate mortgages here would reduce accordingly. Having said that, I don't personally believe that we are going to join anytime soon.

MarkyMarkD

In all this discussion, you've not mentioned the balance on your mortgage.

The rate they are offering you is not at all competitive, but it MAY still be the best value for you over the 9 year term you are talking about, if the mortgage is too small (less than £25k for example) to remortgage elsewhere, or if the fees associated with such a remortgage would be excessive compared to the savings.

That said, most lenders will do "no fee" remortgage deals for loans over £25k which would still be cheaper than the rate you are quoting.

Lady_K

Its a £27,000 endowment mortgage, yes I forgot to mention it. I want to stay with the Halifax though but I don't know if they do any others than the 7 they showed me... I might ring up tomorrow to ask if they were the only ones they do that fit in with my mortgage amount before I start signing papers, thanx

nh

You may find many IFA's don't charge (they make their money from commission), maybe you could ring one near you to ask what they provide... if you have to pay an arrangement fee of £199 isn't that better than spening £1,000 more on repayments over the next year? I don't know what the figures are but if you can take 1% off the interest rate then the savings you make will dwarf the up front costs. It is difficult for us to say what is best as it is a small amount and we don't know your circumstances, but my honest opinion is that the "reward" mortgage stinks!

It is not even below the BofE base rate now, so who is saying it will always be 2% below?

And why do you want to stick with Halifax? Loyalty is no way to save money!

MarkyMarkD

On £27k you can definitely save money. Look at the best buy tables (all over the internet) and see which deal works out best for you, or use an IFA. Many will not charge - as nh says, they get a fee from the lender, although this won't be much for them on £27k.