Lloyds mortgage deal too good to be true?

emma_1312

We currently have a mortgage with Nationwide on the base rate (2.5% variable - 23 years left - balance of £70k - overpayment of £14k within that balance).
We want to try and reduce the cost/term so have enquired with nationwide but their advisors can't get back to us until 16th March.
Have looked at existing customer deals on their website and they have a 2yr fixed for 1.94% we can have for 11 year term for £589pcm which is £47 less than we pay now (£386 + £250 overpayment). Plus we can overpay that extra £47 if we want.
We then got a call from Lloyds who are offering the same thing, with £500 cashback... They pay all fees/conveyancing/valuation costs etc too...
But is it too good to be true? What's the catch?
Can anyone offer any independent advice as to if this is a good deal?

Thrugelmir

With the NW you would revert to the SMR of 3.99%. That's 1.5% higher than you are currently paying.

If you want to reduce the cost then overpay.

emma_1312

Thrugelmir wrote: »

With the NW you would revert to the SMR

If you want to reduce the cost then overpay.

Thanks for replying Thrugelmir.

I calculate that by overpaying we will pay off the mortgage in 12 years, if we switch we will only have 10 year term... I'm not sure I have this right but the switch seems better?

NW and Lloyds both revert to similar rates at the end of the 2 yr fix. Could we not just shop around just before it ends and remortgage again or is it easier to stay where we are? Also, because overpayment now is not fixed we have flexibility if something were to happen and we couldn't pay that much.

There's been talk of the interest rate going down again before it goes up, are we best to just ride it out and see what happens?

dimbo61

You only have the fix for 2 years then it goes to the SMR of 3.99% at today's rate !
You are on a very good rate which is a Lifetime tracker of 2% + BOE base rate.

emma_1312

Ah, so best to stay put, ride it out, overpay by more if the base rate drops and keep on as we are if it doesn't?
This is our first mortgage so trying to work out what's best for you when the only people giving you advice are people trying to sell you their products is difficult! I read the mse remortgaging guide too and it's got lots of good advice, but still trying to work out what's best is hard!

Let_Us_See

emma_1312 wrote: »

This is our first mortgage so trying to work out what's best for you when the only people giving you advice are people trying to sell you their products is difficult!

Then talk to a broker. The answer to your query is fairly straightforward.

getmore4less

£70000 2 years paying £636pm

1. 2.50% £57950
2. 1.94% £57216

follow on 3.99% what if you cant get a new deal or there are fees will soon eat into that £700.

carrying on 2.5% and if you could stay on the 1.94%

1. 125m(+£94) £9564 interest
2. 121m(+£188) £7144 interest

potential savings £2400

adindas

emma_1312 wrote: »

We currently have a mortgage with Nationwide on the base rate (2.5% variable - 23 years left - balance of £70k - overpayment of £14k within that balance).
We want to try and reduce the cost/term so have enquired with nationwide but their advisors can't get back to us until 16th March.
Have looked at existing customer deals on their website and they have a 2yr fixed for 1.94% we can have for 11 year term for £589pcm which is £47 less than we pay now (£386 + £250 overpayment). Plus we can overpay that extra £47 if we want.
We then got a call from Lloyds who are offering the same thing, with £500 cashback... They pay all fees/conveyancing/valuation costs etc too...
But is it too good to be true? What's the catch?
Can anyone offer any independent advice as to if this is a good deal?

emma_1312

It is EXTREMELY unlikely they will offer you 1.94% fix rate for 11 year. Check it again whether your understanding is correct. Like other poster the likelihood is that you could have fix rate for 11 years but you only get the lower rate for 1.94% for short term e.g two years (say) and then revert to higher rate ....

To me for just two year fixed at 1.94% and then revert to 3.5% (say) is not worthy a hassle considering the lower rate you have been paying.

emma_1312

Thanks everyone, they do say if it seems too good to be true it probably is don't they!

getmore4less

The issue is you have a good tracker with other benefit that you lose if you go to a new deal.

There are plenty out there where their current follow-ons/trackers are at a higher rate so have less/nothing to lose if they take the short term benefits of a low rate.

for others the LTV may change so want a deal to match that time frame.