Split rates mortgages - remortgage?

termhero

I have two mortgages (secured on the same property), the first through luck is at 0.67%, I owe approx. £45000 with 17 and a half years left.


18 months ago I borrowed another £45000 over 19 years for house improvements. this is fixed at 5.88% until July this year. I have overpaid what I'm allowed and this mortgage currently resides at approx. £34,500.


I won't be moving until the summer, but am already considering my options, I realise that Account 1 has an amazing rate, I also realise that Account 2 has a terrible rate - and it's because of Account 1.


Quite simply, should I stick with what I have, or remortgage the entire sum?

House value - £160,000 to £165,000 - outstanding mortgage approx. £78,000 with 17 years term.

I have £10k in an instance cash ISA so was considering rounding down to £75k mortgage over a 15 year term, or staying as I am and paying off Account 2 with £6k in the summer.

Any help would be appreciated.

dimbo61

What rate does account 2 revert too in July ?
If it is some kind of SVR can you pay off the £10,000 you have in savings? and continue overpaying every month?

dimbo61

" I won't be moving until the summer "
Are you moving house or just looking at Mortgage options?

termhero

It drops to a SVR of 5.68%.


I can also overpay as much as I like then but am reluctant to use all of my savings. £6k would be my limit really.

termhero

And it's just remortgaging, no house move.

I forgot to add, I am not likely to afford to be able to make regular overpayments after the £6k.

Thrugelmir

termhero wrote: »

And it's just remortgaging, no house move.

Remortgaging is switching lender. All you require is a product switch.

My suggestion would be to pay off whatever you can once the fixed term ends. Then see what your lender has to offer.

Account 1 isn't worth losing.

termhero

I had my figures wrong, I'm currently at 5.89% on Account 2 and this will revert to 3.99% in the summer.


My gut feeling is to do as advised above and stick with what I have, overpaying Account 2 whenever possible.

termhero

Had an 'interesting' time the last couple of weeks dealing with this.


For detail:


Sub-Account 1 (SA1) has approx. £43.5k left over 17 years 5 months (0.17% above base rate until end of term).
Sub-Account 2 (SA2) has approx. £34.5k left over 18 years 0 months (5.84% fixed, now at end of fixed period). I made 2 x overpayments, 1 in each year for 10% of remaining balance.


Recent house valuation from C&G in Keyfeatures Summary is £168k.


So on the 10th of this month, I used C&G's simple online method of switching SA2 to a 2 year fixed of 1.84% (0.2% discount for having Club Lloyds bank account).

On the 11th I received my online paperwork to review, it showed:

SA1 - £42,119
SA2 - £35,350


I knew that SA2 was incorrect, as I had paid £3,833 on Jan 5th (10% of remaining balance of £38,330) and £38,330 -£3,833 is < £35,350.


It turns out that when I made the overpayment, £1,572 was attributed to SA1 in error, I was assured this would be rectified within 7-10 working days.


I called them last Thursday to check how it was progressing and I was told that it had been done on the 16th, but because I had overpaid £2,600 on SA2 (on the 16th), I was now being charged for overpaying more than the 10% allowed. So I queried this because only the £1,572 should have been moved over. This was confirmed as a mistake which they would rectify and of course I wouldn't be charged.


I called them on Friday, just to see if things had now settled down in order to ask for a new set of online paperwork with the correct balances.


I asked for the balances of SA1 and SA2.


"SA1 has an outstanding balance of £283xxxk, SA2 has an"....

"Sorry, I need to interrupt, SA1 has how much?"

"SA1 has an outstanding balance of £283xxxk"


"Mate, I only owe about £77k in total, what's going on?"


"You had £240k added to your mortgage on June 16th".


I'm currently waiting for this to be sorted out before I can go ahead.

I'm only posting for those members who overpay and have sub accounts, because you clearly need to check which sub account has been paid....

TrickyDicky101

Did you have fun spending that £240k? :rotfl:

termhero

TrickyDicky101 wrote: »

Did you have fun spending that £240k? :rotfl:

I did say on the phone that although I hadn't requested it, I was happy to proceed (especially as it was on SA1 - 0.17% above base rate!).


Strange series of administration errors though, just put another application in to switch product online, fingers crossed when the documents come through the figures are correct.

Having said (typed?) that, if they come through with the £240k still on, I'll be signing up to that pronto!