Remorgaging or life-time mortgage?

and_org

Hello!

I've just finished two first years of my mortgage (which was fixed for 2year) and started dealing with re-mortgaging. And I now see that it’s a hassle,as (1) My property can be evaluated again by an agent (2) My mortgage insuranceneeds to be replaced by new one which for some reason is more expensive (i.e.monthly payments) (3) I am asked to supply salary slips, bank statements etc.again.

Now what happens if in 2 years I loose job and will not be able to supplysalary slips? Also every 2 years I become older and insurance monthly paymentsgrow. And what happens if I'll have some illness?

Is life-time tracker preferable from this point of view?

James723

You don't have to re-mortgage. When your fixed rate ends, you will most likely go onto the lenders standard variable rate (SVR). More often than not, this isn't a very good rate, hence a lot of people look to re-mortgage to secure a better rate. But if you felt you weren't in a strong position to re-mortgage, you don't actually have to do it.

Crashandburn

Also worth speaking to your existing lender with regard to their retention rates i.e. the deals to try and keep your business with them, and therefore it would just involve an internal switch for the lender rather than a whole new process.

With regards to the insurances, you don't have to be reviewing these every two years unless you are looking for significant changes in the cover required or indeed the sum assured.

kingstreet

Options;-

- follow-on rate
- customer retention product from existing lender
- remortgage.

Compare all three options in respect of fees, rates, inconvenience before deciding.

Review insurance cover in the same way. If better cover can be obtained at a better price, change. If not, keep what you've got.

holly_hobby

You don't need to remortgage, simply ask the lender what existing borrowing rates they have available (also no status/income checks reqd, if no further borrowing is requested).

Or, you could of course seek an alternative provider with a lower payrate, but this will be subject to full underwriting, with legal, survey and product fees reqd (unless a fee free remortgage deal is sought) - of course if there are any associated fees, for a true cost comparison you must include this in your evaluation between stayng where you are and moving elsewhere.

Hope this helps

Holly

dotdash79

Or you can fix for 5 years and then you only need to bother 5 times over the life of the mortgage.

and_org

Many thanks!

I checked 2 year fix against 5 year fix, yes, re-mortgaging each time costs about £1000, but the rate on 2-year is so less that it beats the 5-year with the re-mortgaging payments.

As I understand, if you stay with the same provider you still need to pay re-mortgage fee (i.e. the £1000).

I actually do all this via mortgage brocker, who found for me the first mortgage, I asked him if I can keep the current insurance and he replied: 'yes you can keep to the current arrangement but the term and outstanding balance is not in line and there is a potential shortfall, this needs to be addressed'

The new insurance quote is higher by £40 per month, I am wondering why I cannot keep the current one.

He also says I need insurance not just against death, but also critical illness, but I heard from people that one can never prove his critical illness to the insurance company, whilst death is easy to prove, so no worth to pay for critical illnesses.

dotdash79

are you paying for advice? or are they tied to a bank or estate agent?

KTF

and_org wrote: »

As I understand, if you stay with the same provider you still need to pay re-mortgage fee (i.e. the £1000).

Its not a 'remortgage fee', there are fees to cover the product fee, legals, valuation, etc.

However, there are some remortgage products that have no fees at all - HSBC have several available at the moment - so in that situation it would cost you nothing to remortgage.

KTF

and_org wrote: »

He also says I need insurance not just against death, but also critical illness, but I heard from people that one can never prove his critical illness to the insurance company, whilst death is easy to prove, so no worth to pay for critical illnesses.

Depending on the lender you need not have any additional insurance at all - the only compulsory insurance is buildings so if the property falls down the lender gets their money back..

If you want to pay for life insurance, redundancy insurance, etc then thats up to you not the mortgage provider.