Pros and cons of mortgage change

trollopscarletwoman

Hello.

My current mortgage is £18,950. Payments at 4.99% variable are £156 per month. Term left 13 years 9 months. Repayment mortg.

Bank has offered new mortgage at 2.14% (only assume fixed for 2 years) then variable (LLoyds bank) mrs only got simple details in rush of moment.

2.14% on £20,000 comes in at £146 per month with £500 cashback.

Overpayment can be max of 10% for first 2 years so I'm assuming that £500 could be pumped straight back in and that is what I would do.

Free legals

Free valuation

I've just thought of mortgage exit fee or "charge release fee" of £130. Who pays that i wonder.

Bought house 3 bed semi in 2003 at £115,000
My market estimate currently £135,000

I'm prepared to save even a tenner a month if I can.

Am I missing anything obvious here?

Another thing that occurred to me is it normal to offer 13 year term mortgages?

getmore4less

what offers does your current lender have.

£18950 @ 4.99% 13 years 9 months should be closer to £159pm.


if it is a 2 year fix check the followon rate.

marathonic

trollopscarletwoman wrote: »

Another thing that occurred to me is it normal to offer 13 year term mortgages?

13 year term mortgages are perfectly normal.

What isn't normal, however, is £500 cashback on an £18,950 mortgage at 2.14%. I doubt the bank will offer this deal.

Assuming you are not moving bank (you're unlikely to be able to move to most, if not all, banks with that low mortgage outstanding), there should be no legal fees needed and, on your figures, no valuation either.

I'd say you can probably switch to a lower rate but would be very surprised if you got the cashback - which is probably reserved for remortgages (and remortgages will have an associatated 'minimum mortgage amount').

getmore4less

the Lloyds on-line calc lets you put in under £20k

cash back has no lower limit
http://www.lloydsbank.com/mortgages/offers.asp

can't find min borrowing.

check the fees admin and closing.

Looks like a lloyds club rate(0.2% discount) and 3.99% followon.
So subject to costs lower than there current deal but the current lender may have something close/better.

marathonic

getmore4less wrote: »

the Lloyds on-line calc lets you put in under £20k

cash back has no lower limit
http://www.lloydsbank.com/mortgages/offers.asp

can't find min borrowing.

check the fees admin and closing.

Looks like a lloyds club rate(0.2% discount) and 3.99% followon.
So subject to costs lower than there current deal but the current lender may have something close/better.

Yeah, I don't see any minimum on their site either. These is a mortgage account fee of £295 though which will negate most of the £500 cashback.

getmore4less

Admin and 2 closing fees eat up the £500

trollopscarletwoman

marathonic wrote: »

13 year term mortgages are perfectly normal.

What isn't normal, however, is £500 cashback on an £18,950 mortgage at 2.14%. I doubt the bank will offer this deal.

Assuming you are not moving bank (you're unlikely to be able to move to most, if not all, banks with that low mortgage outstanding), there should be no legal fees needed and, on your figures, no valuation either.

I'd say you can probably switch to a lower rate but would be very surprised if you got the cashback - which is probably reserved for remortgages (and remortgages will have an associatated 'minimum mortgage amount').

The cashback thing surprises me as well. But all these figures come from the mortgage adviser at Lloyds. We both bank with Lloyds.

I imagine he'd find it difficult to go back on it. But it all needs further investigation.

trollopscarletwoman

getmore4less wrote: »

Admin and 2 closing fees eat up the £500

Thanks everyone for replies.

A little more info. Present lender is the Principality.

I'm going on statement figures for 2012-13 because I can't find 2013-2014.

At that time 31/10/13 the outstanding balance was £19,759. Monthly payments vary from £152.00-£154.00 per month.

Of that around £84 is interest at 4.99%.

"Charge release fee.This is the current charge release fee. This fee is variable and payable upon final full repayment £130.00"

"Amount to redeem your mortgage including early repayment charge (if applicable), as at 31/10/2013 £19,889.79"

Another fourteen months of payments have been made so I think the balance is now circa £18950

Clearly all of this needs further investigation. The new 'deal offered' is a straight mortgage switch not a remortgage for any additional money.

If the £500 cashback was genuine I would use that to lower the balance.

These figures could be used as a leverage tool to try and get a better deal from my existing lender.

You might think that these figures would not be lucrative enough for a new lender but they'd still be getting £84+per month out of me for 13 years on what seems a concrete bet-touch wood.

trollopscarletwoman

Even though its not on the scribbled piece of paper in front of me in the conversation the mrs had with the lloyds advisor the words 'overpayment at a maximum of 10% for 2 years', so I assume it is a fixed rate discount for 2 years then migrate onto whatever the Lloyds variable rate is at that time.

getmore4less

check the web sites

http://www.lloydsbank.com/mortgages.asp

looks like the 2 years fix.

The £500 won't be left after the fees unless they drop the admin.

http://www.principality.co.uk/en/mortgages/existing-customers.aspx

trollopscarletwoman

getmore4less wrote: »

check the web sites

http://www.lloydsbank.com/mortgages.asp

looks like the 2 years fix.

The £500 won't be left after the fees unless they drop the admin.

http://www.principality.co.uk/en/mortgages/existing-customers.aspx

Yes thanks.

If I did switch I would not accept any charges at all.

I'm waiting for a phone call from the Principality. Thanks for your help.