re- changing mortgage

joe134

Hi Guys, need some advice please.
My son has a SVR repayment mortgage with Santander @ 4.74% and his repayments are £290 per month, with 9 years remaining on a house with £26k outstanding on a £200000 house.
He,s been with them years, and requested a quote for a tracker mortgage, which Hsbc are doing @ 2.6%, but they say they will only do it @ 4.74%,same as svr;
I cannot understand why Hsbc' estimate, @ 2.6% is £288 per month,with a 2% drop from Santanders £290 svr No saving at all.?
He wants to sell in the near future, so prefers a tracker," no fee", so that he doesn,t incur a penalty on a fixed rate one, should he decide to move, which I believe is the case with a tracker.and doesn,t have to start over again, should he get a fixed one and stay put ,when it,s up ?
Any advice would be very much appreciated.

Thrugelmir

Product fees.

The rate quoted is only for a limited time then reverts to.

With a £26k mortgage the remortgage fees and costs may outweigh any savings.

Farmerbob

As his balance is so low a % or two drop/increase does not have as much an impact on the monthly cost as you would think. If there's no fees to move and he's not tied in then a couple of pounds are a couple of pounds. But as Thrugelmir says if theres fees it will likely outweigh and savings. Use the calculator to compare the two mortgages to see. http://www.moneysavingexpert.com/mortgages/compare-mortgage-rates

kingstreet

Amount outstanding and residual term means payment is mostly capital and very little interest, hence the rate makes little difference to the monthly payment.

For example;-

£26k x 5% x 9 years = £299.45 per month

£26k x 2% x 9 years = £263.25 per month.

3% difference is only £36.20 per month.

joe134

kingstreet wrote: »

Amount outstanding and residual term means payment is mostly capital and very little interest, hence the rate makes little difference to the monthly payment.

For example;-

£26k x 5% x 9 years = £299.45 per month

£26k x 2% x 9 years = £263.25 per month.

3% difference is only £36.20 per month.

Thanks guys, being mortgage free I,ve lost touch with the market.
I guessed with such a low mortgage, the capital outstanding should start to drop away sharpish;; during latter years.
there were no fees on hsbc one we looked at, because of low balance.probably not worth changing, But;;; as said. a few pounds , is a few pounds, over the long term.:beer:

joe134

Farmerbob wrote: »

As his balance is so low a % or two drop/increase does not have as much an impact on the monthly cost as you would think. If there's no fees to move and he's not tied in then a couple of pounds are a couple of pounds. But as Thrugelmir says if theres fees it will likely outweigh and savings. Use the calculator to compare the two mortgages to see. http://www.moneysavingexpert.com/mortgages/compare-mortgage-rates

thanks Farmerbob, using calculator, and NO fees as hsbc, state, ( unless hidden) then over the remaining 9 year term left, providing rates stay same?????doubt it, he should be about £30 per month better off;
cannot see base rate changing for 3 years at least;according to Carney et.al
I thought Santander would have reduced it for loyalty, 16 years with them, but no.
have to keep looking. just plucked Hsbc , because it,s my bank, and it was daily mail reccommended as a top tracker deal.Is there a link for all available new deals on Mse to compare others.?
:beer:

Yorkie1

OP, have you double checked that there are no legal / survey fees as well as no application fees - that would make a difference to the figures.

joe134

Yorkie1 wrote: »

OP, have you double checked that there are no legal / survey fees as well as no application fees - that would make a difference to the figures.

Hi Yorkie, just had another look at Hsbc, and it, says Lifetime feefree tracker, no mention of any costs/fees whatsoever.2.09% + base rate
According to same page in daily mail, Santander do a similar one, which they didn,t offer the son.but at a higher rate, but below thier svr.?
According to hsbc, it comes out at £270 per month, @ 13 % ltv.which is a reasonable saving,( £20>£30 ish; IF there are no hidden fees, only a phone call to them would clarify that I presume.

kingstreet

Products for new borrowers are normally in one range and those for existing borrowers in another. There's no point looking at Santander remortgage products if you are an existing borrower as they will not be available.

Products for existing borrowers are "customer retention" products and are often not as good as those for new borrowers, unless with a lender like Nationwide who give the same quality of product to existing borrowers as they do to new ones.

Yorkie1

joe134 wrote: »

Hi Yorkie, just had another look at Hsbc, and it, says Lifetime feefree tracker, no mention of any costs/fees whatsoever.2.09% + base rate
...
According to hsbc, it comes out at £270 per month, @ 13 % ltv.which is a reasonable saving,( £20>£30 ish; IF there are no hidden fees, only a phone call to them would clarify that I presume.

From HSBC website:
"Zero fee means: no booking fee, no standard valuation fee and no completion fee. We will cover the cost of one standard valuation where this is required by HSBC as part of your mortgage application. Other fees and charges may be payable to other parties including, but not limited to, legal fees and charges levied by your existing lender. We reserve the right to withdraw this offer at any time without notice."

It looks as though you will need to pay legal fees. How would, say, £500 affect the overall figures?

joe134

Yorkie1 wrote: »

From HSBC website:
"Zero fee means: no booking fee, no standard valuation fee and no completion fee. We will cover the cost of one standard valuation where this is required by HSBC as part of your mortgage application. Other fees and charges may be payable to other parties including, but not limited to, legal fees and charges levied by your existing lender. We reserve the right to withdraw this offer at any time without notice."

It looks as though you will need to pay legal fees. How would, say, £500 affect the overall figures?

Hi Yorkie Cheers, £500 is equivalent to approx 18 months of the saving, providing nothing alters.
Santander, on thier site, SAY, existing customers can change to similar product as Hsbc with £495 fee;but, presume, no more if he stays put, as no third party?? fees?
Why they didn,t offer him this, I don,t know,. All very vague.
As I said at begining, he wants to sell and move, but not sure when, so to recoup his £500, he would have to stay for 12> 18 months, which, is ok, as long as base rate stays put;that,s the gamble in life.Will mull it over.:beer: