5 year term/2 year fix - ERC's after fix ends??

Milothe

ViolaLass wrote: »

Fair enough. Do you need to fix at all? Over such a short period, interest rate would have to do crazy things to bother you and you could avoid ERCs.

Have worked out how to quote now

We're just trying to keep the cost down as much as possible. We still have a small mortgage on our other house, so to go repayment on the new mortgage as well might be a bit of a squeeze.

What do you all think of my numbers? Are my calculations correct?

fewcloudy

What? If not a repayment mortgage then what were you thinking of?


I agree with VL. The cost of a fixed rate product in the 1st place, plus the ERC's that you are quoting seem an unnecessary hit for you to take.


fc

amnblog

Suggesting to Lenders that you only need your mortgage for five years is a good way to get a decline.

Many, will read their flow chart under the 5 year term section and quote 'we don't do short term lending'.

In fact, they all do 'short term lending' due to a buoyant remortgage market.

Milothe

fewcloudy wrote: »

What? If not a repayment mortgage then what were you thinking of?


I agree with VL. The cost of a fixed rate product in the 1st place, plus the ERC's that you are quoting seem an unnecessary hit for you to take.




fc

amnblog wrote: »

Suggesting to Lenders that you only need your mortgage for five years is a good way to get a decline.

Many, will read their flow chart under the 5 year term section and quote 'we don't do short term lending'.

In fact, they all do 'short term lending' due to a buoyant remortgage market.

To clarify - we have a small repayment mortgage on our second home which is due to finish next year. We intend to take out a mortgage interest only against our main home to purchase a third home while we wait for the second home to sell. We don't have the capital at the moment to pay outright for the third home and would look to do so eventually from husbands pension LS and this is why we are looking at IO.



In other words, a short term loan can be done, but just don't tell them of your intentions?

amnblog

Make the ST Loan your later decision if appropriate, not a negotiation at outset.

Milothe

amnblog wrote: »

Make the ST Loan your later decision if appropriate, not a negotiation at outset.

We haven't. I know we'd find it hard to get any high street lender to agree to a short term loan, which is why we are going for a 5 year term. All I wanted to know is if we should win the lottery, come into a sudden windfall from my rich American auntie, or indeed, take a pension lump sum after the fix is out, we had the potential to pay off early without ERC's

amnblog

The point is that, 5 years is a 'short term loan' for a number of lenders.

Milothe

amnblog wrote: »

The point is that, 5 years is a 'short term loan' for a number of lenders.

Point taken thanks - this was the 'shortest' term we could get.


You obviously know what you are taking about - in terms of my hypothetical calculations up thread, is my interpretation correct? Or have I got the wrong end of the stick?

amnblog

Mr M is incorrect. Early redemption penalties expire with the product. A two year product will carry an ERP for two years.

getmore4less

You are telling your potential lenders far too much information

going in with short term in mind, lenders not keen.
going with interest only to keep costs down another potential negative.

Why not go for a longer more flexible product that you can keep going to manage cash flow.

a longer term offset would do this and you can overpay/offset as much as you like(just don't tell them) and have access to the funds for longer and this will adapt to changes in circumstances potentially much better than a 5y interest only.

A few hundred quid saving could be wiped out by a short term crisis having to find the money or sell one of the properties on the cheap.