Cashback straight forward?

Dird

Hi,
I got my offer accepted Today and have decided on going with Yorkshire BC for the mortgage (if they will have me & don't throw out some fees I haven't already read about). As I'm taking a short term mortgage the fees are more important than the rates.

Does anybody know if they tend to have secret conditions to avoid paying out? e.g. if I took out a 9 year mortgage but paid in 6-7 would they argue I didn't meet the cashback agreement of "to completion" (in terms of duration rather than payments) as they make less interest than hoped?

Providing the cashback is paid out it seems not only is it cheaper long term but you don't have to pay such big fees at the start~

Here's my working out for those interested: http://www.pasteall.org/pic/show.php?id=89324
done using https://www.drcalculator.com/mortgage/uk/

PixelPound

Most cashback is paid on completion of the house buying stage, not when the mortgage completes. I think it is usually paid to your solicitor who then sends it to you. If you took out a 9 year mortgage but paid in 6-7 it would be dependent if there is an Early Redemption Clause in it as to charges.

Dird

My plan is to take a 5 year fixed deal then save & pay the remainder/as much as possible on either the last day of the fixed deal (and take the penalty charge) or the first day of the variable period.

My assumption is it's pro-rata so if I had £30k left and the var was 7% I'd pay £2100/365 (so about £5.75 interest) if I did it first day after the 5 year fixed...is that right or would they hit me with the full 7%? :f

libf

Usually early repayment charge only applies within the fixed period, although there may still be a redemption charge, but that is generally a fized fee rather than a %. You'd need to read the mortgage T&Cs to know for sure though.

Dird

libf wrote: »

redemption charge

There is but it's only £130

libf

Dird wrote: »

There is but it's only £130

I guess in the grand scheme of mortgages it's 'only' £130, but Nationwide's is £65...

PixelPound

Looking at when ERC kicks in, YBS say " Make overpayments of up to 10% of your remaining loan every year", so that you could end up getting down to £10k when the 5 year fix ends.

Dird

libf wrote: »

I guess in the grand scheme of mortgages it's 'only' £130, but Nationwide's is £65...

From my calculations YBC seems cheaper than Nationwide by about £800-900 but that's with me assuming most of these fees aren't necessary? http://www.ybs.co.uk/help/mortgages/fees-and-charges.html

I don't really know what most of them are but they sound optional extras.
The fees I included from YBC = app fee (£130), exit fee (£90) and transfer of equity (£160). Perhaps "Certificate of title" and a couple more are required?

For Nationwide the fees I counted were Telegraphic transfer (£20) and Transfer of Equity (£90). I don't think Redemption charge applies for me with them as they say "if paid 10 or more years earlier than mortgage duration" but I hope to pay 2-3 years earlier.

Here's my workings out: http://www.pasteall.org/pic/show.php?id=89346

Dird

nic_c wrote: »

Looking at when ERC kicks in, YBS say " Make overpayments of up to 10% of your remaining loan every year", so that you could end up getting down to £10k when the 5 year fix ends.

I'll probably avoid overpayments for a couple months so I at least have 1 month's mortgage cover in savings. I'll need to see what their conditions are like on Monday.
My hope is it's assessed on a per year basis so I could make larger deposits some months e.g. pay less in the month of my car insurance renewal but balance it out in the later months. I think HSBC/others say the overpayments should be regular & consistent to avoid charges.

Dird

Dird wrote: »

Here's my workings out: http://www.pasteall.org/pic/show.php?id=89346

They were wrong =/ (although still cheaper than nationwide I guess)
Been calculating with ending in July rather than just using all of 2020 as a guestimate. Outcome:

7y mortgage
2y to 3y: £85,364.25 (inc overpay) -- 1,001.13/m then lower (exc overpay)
2y to 3y + cb: £84,364.25 (inc overpay)

5y + cb: £85,677.99 (inc overpay) -- 1039.91/m (exc overpay)

8y mortgage
2y to 3y: £85,761.87 (inc overpay) -- 882.20 then 870.32 (exc overpay)
2y to 3y + cb: £84,761.87 (inc overpay)

5y + cb: £86,188.04 (inc overpay) -- 921.17 (exc overpay)
5y + cb: £86,547.66 (exc overpay)

That's assuming same rates as now in 2 years time & processing & redemption fees are the only fees imposed for remortgaging.
I'm guessing you can't just remortgage at the same company on the exact same duration/loan amount? If it was and cashback is still a fad in 2 years then it could mean saving £1.2k if those are the only fees.