Mortgage choices

InhaleMood

Hi All,

I wrote on here yesterday and got a couple of questions answered, but each day seems to bring more confusion!

So, I am selling my shared ownership flat for a house. I have a £40,000 mortgage on the flat, at 4.29% fixed until June 2014.

I will need another £90,000 to buy the house. Santander have suggested a 2 year fix at 4.75% or 5 year fix at 5.09%. There would be no early repayment charge or booking fee.

However, I spoke to a broker yesterday and he gave me a couple of other options where I pay the ERC (£1200):
5 year fix, around 4.89%, product fee of £999
2 year fix, 4.19%, product fee of £995.

Any suggestions about what would be best? I would really appreciate it!!!

ACG

Do your sums.

Does it make sense to pay 4.89% plus £2,200 in comparison to 5.09%?
The same goes for the 2 year figures.

I would hazard a guess that it probably doesnt at £90k, but work out how much less the monthly repayments will be over the 2 and 5 years. If it amounts to more than £2,200 your quids in.

InhaleMood

ACG wrote: »

Do your sums.

Does it make sense to pay 4.89% plus £2,200 in comparison to 5.09%?
The same goes for the 2 year figures.

I would hazard a guess that it probably doesnt at £90k, but work out how much less the monthly repayments will be over the 2 and 5 years. If it amounts to more than £2,200 your quids in.

Thanks for your advice. The problem I had when I was working that out was that the ERC is payable in a lump sum and the product fee would be added on to the mortgage.
Does that make much of a difference?

ACG

The product fee can possibly be added to the mortgage. Either way you are only talking about a few pounds probably.

Monthly payment x 24 or 60, if the difference is a few quid one way or the other, just go with whichever you prefer. If its £100 plus then it starts to become a little more important.

StuC75

But if you are having a 90% LTV then you may have problems adding those fees on top - Some lenders wont add on fees if it takes you above those thresholds.

The New rates are not much of a saving on what the existing £40k is at.. 5 year is higher, 2 year is only 0.1% cheaper

So it is difficult for there to be a case where it be more affective to pay the ERC + Product Fee and have the 130k mortgage at a Higher Rate. Particularly when less than a year left to go on the fix..

How far along are you with the sale? - June 2014 isnt that far away when it comes to a drawn out sale...

amnblog

Surely the broker is the best place for this query?

InhaleMood

StuC75 wrote: »

But if you are having a 90% LTV then you may have problems adding those fees on top - Some lenders wont add on fees if it takes you above those thresholds.

The New rates are not much of a saving on what the existing £40k is at.. 5 year is higher, 2 year is only 0.1% cheaper

So it is difficult for there to be a case where it be more affective to pay the ERC + Product Fee and have the 130k mortgage at a Higher Rate. Particularly when less than a year left to go on the fix..

How far along are you with the sale? - June 2014 isnt that far away when it comes to a drawn out sale...

Having done the sums, it makes much more sense, and I think the best option is just to stay with Santander. Fortunately, I don't think it will drag on until June.

Thanks for your advice though!