Abbey Mortgage - Should I stay or should I go

jtotheb

Hi, I'm after some advice regarding our mortgage situation. Our 2 year discounted variable rate mortgage with Abbey comes to an end in August and I'm starting to look around at whether it is worthwhile staying with Abbey or moving to another lender.

Abbey have offered the following products to me:
2 Year Fixed at 5.49% - £999 arrangement fee
2 Year Fixed at 5.79% - £499 arrangement fee
2 Year BRT at 0.21% of BofE Rate (therefore 5.29%) - £999 arrangement fee

No other fees apart from early redemption fees and product will kick in as soon as existing product finishes.

I'm debating a few things at the moment:
1 - To me, this sounds like a fairly typical deal amongst the major lenders and will certainly be far less hassle than me having to move elsewhere. Can anyone recommend another product that would be significantly better to warrant the hassle of moving to another lender?

2 - I hate these high arrangement fees that have started to be charged by lenders. Has anyone been able to knock Abbey down on the arrangement fee?

3 - My wife is pregnant with twins at the moment and I'm debating whether to stick with a variable rate again or go with a fixed rate for 2 years to protect our monthly payments with the impending cash drain that will be the new arrivals! So (crystal balls out), what do people think that the rates are likely to rise to as a maximum? I've been stung on my current deal these past 2 years by going with a discounted SVR tracker rather than a fixed rate but I really don't want to lose out on dropping interest rates if I can avoid it over the course of the next two years.

Your collective wisdom is greatly appreciated!

KTF

1. Without knowing your full circumstances its impossible to recommend a deal to you. You should so and see whole of market broker and let them do the legwork for you. Some lenders, such as Nationwide, will also pay legal and search fees if you move to them.

2. The arrangement fees 'buy' that product for you and are almost always un-negotiable. The lowest fee is not always the cheapest as it depends on the rate as well. If you dont like paying product fees then you might consider a 3 or 5 year deal instead?

3. Personally when my fixed comes to an end in September I will probably go for a tracker on the basis that rates will peak towards the end of this year then edge downwards from then on. Trackers seem to be lower than fixed at the moment as well so even if the rate does rise I havent lost anything.

jtotheb

I'm in the process of carrying out point 1 but thought I'd check with the board as well!

Re: point 2, I presume the smaller the loan, the more important / relevant the fee is?

I agree with you on point 3. I'm paying more than 5.29% now so any rise up to .5% will still mean I end up paying less than at present.

KTF

A large fee on a small amount can make a bigger difference than a large fee on a large loan. To get an idea of the true cost you need to add up all the fees, divide them by the term then add the result to the monthly payment.

kennyboy66_2

My advice would be to go with a fixed product if your just about to have twins. The stress of twins will be surely enough without the worry of interest rates going up as well.

I hope interest rate do peak at the end of the year, although my gut feel is that we are seeing inflation creeping back into the system and that rates will have to be jacked up to get it back under control. Inflation has been kept low by a combination of cheap Chinese exports, strongish £ and big influx of eastern european labour & these effect will diminish over time (& perhaps even reverse).

I would also consider 5 year deals, as for mortgages under £100k the fees are becoming a bigger part of the overall cost.

eira

I have an Abbey mortgage and switched to an offset tracker which is fixed at base rate plus 0.49 % for the life of the mortgage. There are no penalties for
overpayment etc and as I remember it was either free or something like £300. You can put money in the savings pot so it comes off your mortgage loan interest but you canh also access the money if you need it. For my precarious situation it has been a godsend- I overpay (just a few quid makes a difference) when I can and the money is still there if I need it for emergencies. Even my £3000 savings pot makes a difference.

Wyndham

eira wrote: »

I have an Abbey mortgage and switched to an offset tracker which is fixed at base rate plus 0.49 % for the life of the mortgage. There are no penalties for
overpayment etc and as I remember it was either free or something like £300. You can put money in the savings pot so it comes off your mortgage loan interest but you canh also access the money if you need it. For my precarious situation it has been a godsend- I overpay (just a few quid makes a difference) when I can and the money is still there if I need it for emergencies. Even my £3000 savings pot makes a difference.

I'm looking at this at the moment. We've had a 3 year with Abbey at 0.01% below base rate (mortgage is 200,000), and they've offered that for a further 2 years with an arrangement fee of £499, but I also asked about offset, for which the arrangement fee is £599 now. But, it does make sense I think as we do have savings, and add to them each month.

I've also stoozed in the past, but put it on hold while I sort out the mortgage, but would do that again to increase the savings pot.

I'm interested in the answer to the OPs question as to whether anyone has ever managed to NOT pay the arrangment fee though.

jtotheb

Well, I've made a decision now. I decided to go with the 2 year fixed at 5.49%. As kennyboy said, with twins on the way, I wanted to keep things a bit certain for a couple of years.

Wyndham, I tried ever so ever so hard with Abbey to get a reduction in the arrangement fee but they just weren't having it. The Customer Service drone I spoke to said that many people ask but it is non-negotiable. Oh well. I'm happy with the product so that's all that counts I suppose!