Remortgage - Loads of extra costs

bazza1603

Hi,

I don't regard myself as silly when it comes to mortgages, but I am no expert either. I am trying to remortgage, and have started the process off, but keep on finding extra costs that I previously have never paid. I am looking for advise to what people think I should do to avoid tipping money down the drain

My current LTV is 36 percent on a property worth £195k. I am looking at paying £3.5k of my credit card (vast amount for home improvements over the past year) and also borrow an extra £8K for a new motor daft as it seems. I also get hit for a £1500 ERC which will be paid off as well included in my mortgage figure. However its only costing £60 extra a month and this is fixing for another 10 years as the rate is lower. Paying the minimum on my credit cards it will take 5-6 years anyway, so I regarded this as a no brainer.

I am not cash rich and I budget every month down to the penny. I am worried we will be turned down on affordability and end up with a bigger debt as nothing has been confirmed as accepted yet. I have spoken to them over the phone about the extra money and they couldn't see a problem

In the past legal fees have always been included, but this time its £600 for a solicitor, and now they want £250 for a valuation. I have always used the Key facts sheet and feel an idiot for not thinking about these charges as nothing is mention on the form

I still have 18 months left on my mortgage, so can walk away at the moment losing £130

Any advice?

best regards

Barry

holly_hobby

A remortgage has always had legal, survey and admin fees, unless a fees free deal is sought - where basic legals & survey fees are absorbed by the lender (which is probably what your prev arrangements were, if you didn't have to arrange and pay for these on previous remortgages).

Whether a fees free deal has a lower overall costing than a fee deal, will depend upon the overall difference in payrate over the term, comparing the overall costing under a fees free and fee incurring deals - where especially for larger low LTV mortgages, a fee incurring deal can ofter give a greater overall saving over the term ..... crunching some numbers will reveal.

Hope this helps

Holly

ACG

For 18 months is it worth paying those ERCs?

If your not happy with the fees, look for a different deal. There will be deals with legal/valuation fees etc. Maybe speak to a broker?

bazza1603

Limited for choice for 10 year fixed deals. I was happy with the ERC, as its peace of mind against rises.

What's the best way to proceed and limit the impact incase the deal falls through?

happycamel_2

It will depend on the lender. I remortgaged from Santander to HSBC and paid £600 product fee (including legals etc), I think it would have been double but I opened an HSBC bank account to get a preferred rate.

amnblog

are you saying you are paying what is a 2% erp to get out of your mortgage rate now, rather than wait 18 months?

Have you taken advice on this Barry (not now, before you started the process)?

ACG

If you are that worried about rates rising, you need to do the figures on what would happen if rates rose say 1%, how much out of pocket you would be - and how likely that is to happen.
If your ERC drops once you have less than 12 months to run on your deal, it might be worth waiting until then. Most lenders will allow you to secure a rate for between 3-6 months from application.

silvercar

Have you asked your existing lender if they have a fixed rate product and would be willing to increase the mortgage amount? That would save on legal fees. Obviously look at the overall offering, but may be a good place to start.

bazza1603

This has been my own logic. Never seen an advisor and own bank wont extend.

At the end of my term if the rates increase to 5.99, I will be paying the same as I will be with the extra money

So I am protecting my mortgage rate for 10 years, paying my debt off and have no worries for the next decade

We are happy in own home, kids will still be in school in 10 years (just)

I am increasing the term by 2 years but am planning on overpaying to counter this.

I have overpaid by £20k in the last 7 years, so see this as withdrawing some savings!

I am in 2 minds just to get a loan