Remortgaging - advice required?

Terryhallsboots

I wonder if anyone could tell if there's a flaw in my logic or if there are any questions I should be asking.

We are looking to remortgage with our current provider First Direct. We will be moving to their 5 year fixed rate, 2.99%, 65% Latvia product on a £111000 loan over 12 years.

This will give us an affordable monthly repayment of £918.

We are in no danger of losing our jobs just yet, but who knows what will happen in the next few years. Therefore we are thinking of taking the loan over a greater term probably 16 years which would make the repayments £728, then overpaying by £190 a month. So if one of us did lose our job we would have £190 to 'play' with.

FD do not charge for overpaying so by my calculations I shouldn't be any worse off if neither of us lost our jobs and we saw out the 5 years and didn't miss a single overpayment.?

Your thoughts and comments would be really appreciated.

Terryhallsboots

Bump...... Can anyone offer advice?

Yorkie1

How old will you both be at expiry if the mortgage is 16 years long? Will you be into retirement territory?

If not, it seems a sensible plan if you think you will be disciplined enough to make the overpayments while income is steady. Otherwise, you'll end up paying a lot of extra interest that you wouldn't have needed to pay otherwise.

Do you have 3-6 months' outgoings in an emergency cash fund, and do you have pension provision?

Thrugelmir

If you remain with your existing lender then you are not remortgaging. Merely switching product.

A request to extend the contract term will result in a full review. No guarantee that FD will allow this. As their obvious thoughts will be that there is a undisclosed reason on your part behind the request.

Terryhallsboots

Thanks for your thoughts.

Yorkie1 - we've got all bases covered (excuse the Americanism) in regards to the points you've raised and we are very disciplined when it comes to repayments.

Thrugelmir - I didn't think of that. I'll check whether this would be an issue for them.

bugbyte_2

Amazingly I have just started a thread with near exact same question! We are looking at an N&P 5 yr fix @ 2.74%

Terryhallsboots

Great minds and all that. Unfortunately I'm just short on the equity for that one.

Gambler

Thrugelmir wrote: »

If you remain with your existing lender then you are not remortgaging. Merely switching product.

A request to extend the contract term will result in a full review. No guarantee that FD will allow this. As their obvious thoughts will be that there is a undisclosed reason on your part behind the request.

I am also with first direct and coming to the end of a 5 year offset fix. If I want to switch to another offset product can I still apply for the original £140K or only the outstanding balance of £113K?

Also if switching products do I have to pay the legal, valuation and redemption fees?

Thrugelmir

Gambler wrote: »

I am also with first direct and coming to the end of a 5 year offset fix. If I want to switch to another offset product can I still apply for the original £140K or only the outstanding balance of £113K?

You switch the remaining outstanding balance on the mortgage at the time, so £113k.

Gambler

Thrugelmir wrote: »

You switch the remaining outstanding balance on the mortgage at the time, so £113k.

Could I draw down some funds then switch product?