Abbey Mortgage Tie-in / SVR query

ascott

Hi,

I have a mortgage with Abbey split into 2 loans. (The second loan was arranged to fund a property purchase and is slightly out of sync with loan 1).

The first loan (Approx 40k) ended its tie in period in July so has reverted to Abbey SVR. The second loan (Approx 100k) is due to end the tie in period in Nov 07.

With further interest rate rises looming, should I continue paying the SVR on Loan 1, until loan 2 is out of the tie in period - to avoid an early repayment charge. Or, should I pay the early repayment charge in the hope that I will get a better rate now than in a few months time.

I have approx. 21 year remaining on both loans.
Regardless of the route I choose, I intent to combine the loans into a single loan and will probably opt for a fixed rate (due to circumstances).

Any suggestions appreciated.

x_Wilco_x

Whether to wait until Nov and pay the SVR on loan 1 then fix both or fix both now and pay the early repayment charges on loan 2 would depend on the costs involved and which was the cheapest option...

I have just had the same situation with Abbey (loan 1 ending in Sep and loan 2 ending in Nov) Because, in my case, the redemption fees on loan 2 are well over £2000 I am paying the extra on loan 1 at the SVR until Nov then have arranged a new fixed rate, for both loans, starting in Nov when loan 2 ends...

You can arrange a new deal with Abbey now to start in Nov, or at least get their best offer which gives you time to look at re-mortgage deals elsewhere if cheaper for you...

ascott

Thanks Wilco.

I have since phoned Abbey and the early redemption fee is ~ £2200. I hadn't appreciated that the fee goes up closer to the end of the loan. Needless to say i'll not be coming out the tie-in period before the end date.

I also thought it would be too early to start shopping for a new deal now, so hopefully I can secure a reasonable deal, combining both loans, before any further rate rises.

I suppose my only remaining query is - if I arrange a new deal with Abbey starting in November, can I cancel if I source a better deal in the mean time? i.e before any arrangement fees are paid.

x_Wilco_x

Yeah you can arrange something now, at the current rates - some guys on here told me that!

They gave me a 14 days cancellation period from agreeing over the phone, all the paperwork comes through the post but I didn't need to return anything... You can obviously add arrangement fees to the loan, so nothing upfront if you wish.

Also, negotiate with them - they started quite high but after the adviser had been to chat to a manager a couple of times I ended up with a rate, and fees, I was happy, with... It actually was a very competative deal given the current rates - but I will still be taking a hit!

MarkyMarkD

You can't hold your Abbey switch offer forever. If you don't cancel within the 14 days, the switch is effective and you are tied in to the new product - irrespective of whether you've paid the fees or not.

With other lenders you have to return the switch documents to switch, but the same still applies - once you've signed and returned, you are committed.

If you want to consider remortgaging elsewhere, start applying now rather than waiting. And don't apply for the switch unless you want it.