General rate fixing advice required

Willyk

Hi, First time on this forum. Just looking for someone who knows there way round this area to give this a quick once over in case I am missing any tricks.

My current fixed rate deal on my interest only loan of £79,500 is due to run out on August 3rd this year.

I also have a repayment loan of £9,500 (correct on Dec 31st 2012) with a rate of 3.74% term remaining 8 years. Feature end date on rate 18/1/2016. No early repayment charges.

I received a letter from my current mortgage provider Santander a few weeks ago with the following offer on my interest only loan:

Fixed until 2 July 2015

Initial rate 2.29% Followed by our SVR, currently 4.74% (overall cost comparison 4.4% APR.)

Booking Fee £799
Transfer Fee No

Just spoke to them and they quoted me various rates for 2, 3 and 5 years. They mentioned that I can also move the repayment loan (currently 3.74) onto the new rate so total debt of £89000. The following include the repayment so are for the full £89000.


Term Rate Fee Total monthly cost

2yr 2.29 799 £256
2yr 2.59 No £279

3yr 2.79 799 £293
3yr 2.99 No £307

5yr 2.99 799 £307
5yr 3.19 No £321


I have money to pay upfront fee if required but working out the payments over a 24 period I think it is better not to pay the fee and take the higher rate on the 2 year one anyway. Am I correct in my sums ?

I am thinking of just fixing for 2 years and also paying about £4500 off the repayment loan. This would reduce the monthly payment by about £60. The £9500 repayment loan on a rate of 2.59% works out at £107 monthly.

Rates above are on offer until May 16th but after they may change. Will they ?

I am not sure whether to immediately jump into a new fixed deal or wait until it get closer to the actual end date of the current fixed deal in August.

House has a current value of about £275000 - £300000.

Looking at the rates on the best buy tables the above rates seem to be not too bad and no hassle with changing to a new lender. Any comments on this ?

We are planning to use the money we are due to save when we switch (about £300 a month) to start paying some of the repayment loan and then the interest only loan every 3 months. Is this a good idea ?

Any thoughts on the above ?

Many Thanks in advance.

opinions4u

The no fee rate sounds good. While what's on offer can and will change nobody knows when or what to.

Taking action to manage your interest only debt down sounds sensible. Make sure you do it in a way that avoids ERCs.