New deal with mortgage

alwaysbrassic

Could anyone please advise?
Our fixed rate comes to an end in a few months when we revert to a very high svr.
I have looked around and seen quite low remortgages but with very high arrangement fees. Having spoken to my current provider, they are willing to offer a 2.99 2 year fixed rate for a very low fee.
We have deceived to go with this, as a remortgage with another company would mean a new valuation, and this could lead to a borderline LTV.
What I would like to know is would the new rate with our current provider be classed as a new credit application?

_Andy_

No - not unless you are borrowing more.

alwaysbrassic

Thank you for that, very helpful. Our 0% credit card deal runs out not long after the mortgage so I was concerned about 2 credit applications in a short space of time.

kingstreet

If your existing lender carries out a "desktop" valuation for the customer retention product, will that be ok, or is no valuation needed?

alwaysbrassic

They have told us that there will be no new valuations, or legal fees, so I am hoping it will be ok.
They told me they will run through terms and conditions on the phone, as well as sending them out, but the new rate will basically kick in as soon as the old one finishes.

kingstreet

You don't say what the LTV is, so there's no way of commenting on the rate you mention.

Plenty of lenders offer fee-free remortgage products and the fee situation often means better value for smaller mortgages, where a very keen rate means more is saved on interest by the bigger mortgage.

Do you actually want a two year fix, or are you settling for this because it's all you're being offered?

alwaysbrassic

We want a 2 year fix as we are not sure that this is the house we want to stay in.
We bought this house almost 2 years ago, for £158,000 with only just 20% LTV.
The house has since had a refurb (kitchen bathroom, fencing, paving etc).
However a house same style as ours sold recently for £150,000 (again needed full refurb). I know that this doesn't make too much of a difference to the price. If ours sold for this it would take us to less than 20% which would send out payments rocketing.
That's why I feel we would be better playing safe, the bank we hold a current account with has discussed a 2.99 5 year fix with us, but the arrangement fee is £1000, and there would need to be a new valuation.
Do you think there would be a better option out there for us?
Thanks in advance.

kingstreet

Do you mean 20% LTV, or 80% LTV, as in 20% deposit/equity?

A two year fix may be a good idea if you intend having no mortgage after two years, but it may be sensible to consider a five year, as long as it is portable (can be moved to a new mortgage on a new property) to enable you to move more easily?

You need to work out the impact the fee has on the rate, but if you borrow over a longer period, you have longer to make back the fee payment. For example, over two years, a £1000 fee means a rate has to be £42 per month better. On a five year fix, it's only £200 a year, or £16 per month difference...

Research the options a little more and if, ultimately, you feel a two year fix suits you best, then go for it.

alwaysbrassic

Sorry we had 20% deposit. I didn't phrase that too well!

alwaysbrassic

The charge the mortgage provider has put is £125 on the 2 year fixed. There was also a 3 year fixed at a higher rate with a small fee but this worked out £40 per month more expensive when you factored in the fee as well.
Due to the doubt of valuation, im still swaying more to the 2 year (that and we are not sure how long we want to live here). Thanks for your help.