should i stay with woolwich or move?

mum2many

Currently we have a mortgage thats £112,500(approx) with a reserve account of £14,500 (approx). we would like to add another £26,000(approx) to it to consolidate everything.

We are looking at a fixed rate for 5 years at around 6%. This is to allow me to go to college and then to uni and then work for 1 year before changing it all again.

Then when i am working we will drop the term down and raise the monthly payment to hopefully compensate for the 5yrs.

But do we add £26,000 to our existing mortgage, where we wont actually be paying off the reserve account will we? or do they recalculate it so we will be paying it off? they said we would be paying an extra £195 a month.

Or do we go for a completely new lender?

advice please

Moggett

Does the £26k include the amount in the reserve account or is it £40,500 to include the reserve?

mum2many

Moggett wrote: »

Does the £26k include the amount in the reserve account or is it £40,500 to include the reserve?

£40,500 to cover the reserve:o

Moggett

Ok, the reserve account is attracting interest at 7.89% variable so you would be better off consolidating that into the main mortgage at the fixed rate. This would give you a mortgage of c.£153k @ c.6% which is better than £138500 at 6% and £14500 at 7.89%. This would also, if you stuck with Woolwich, give you a healthy reserve account limit so that in emergencies you could still draw on it. I would advise sticking with Woolwich so that you can use the reserve as their 5 year rate at 6.19% is still very competitive. Halifax have a 5 year fix at 6.14% with free legals and valuation but obviously no reserve account.
Hope this helps

veralum

when the amount is over 25k you can ask for a further advance, which is quicker, on the same deal and has less charges invovled. (if it below 25k its apersonal loan at ahigher int rate)

something to consider when working out how you want to do it

mum2many

thanks

not really sure how the Woolwich are doing it. not sure if they are working on our exsisting mortgage term (18 years) or 25 years

if its just the mortgage of £112,500 + £26,000 for an extra £195 and i wont be paying the reserve off, it will be costing me the same as going to a new lender and borrowing the full £153k.

I know the reserve helps but if we havent got it we wont use it, the same as the credit cards. we want to get rid of all debt asap

hopefully in 5 years we wil be in a better financial position to pay an extra amount off the mortgage every month.

have even seen a mortgage of 5.99% for the life of the mortgage which is very tempting. I like to know where I am every month with payments.