Can someone help with some figures please?

Burlesque_Babe

A friend has come to me for some help in deciding whether to stay with their existing mortgage company or look elsewhere. They have asked me because i'm an MSE addict :rolleyes: but I'm obviously not qualified really to help!

I've told him to chat to an all of market advisor but he is a teacher and time is very short in the week, so he is willing to take on board whatever I can find out and make a decision from there.

He has £99,000 outstanding on a repayment mortgage with the Abbey and 22 years left. He has come out of the current deal and is paying about £711 a month.

The best the Abbey can offer is 5 years fixed rate at 6.4%. I asked if he had asked about a 2 or 3 year deal but he said that was the best rate they could offer.

I've had a quick look around and Barclays (who he banks with and has a secured loan with) is offering 5.19% on a 2 year fixed deal with a fee of £595.

Other high street banks don't seem to be offering much below 6.4% and those that are have a higher arrangement fee.

The only other one I've found is the Woolwich at 5.59% for 2 or 5 years with a £995 fee which comes out at £652 per month (according to their online calculator)

He is scared of fixing for too long in case the rates really drop but I don't think he will have much of a choice.

He doesn't want to consolidate the secured Barclays loan (about 6 years left to pay) into his mortgage. I don't know how much he has left on it, probably around £8k.

He earns £31,500 and his house is worth £200,000. His credit rating is very good although he has £10k of CC debt which he has just moved to 0% (although no payments ever missed)

Should he stick to the Abbey, or is it worth talking to Barclays or the Woolwich about the 2 year deal? How do the figures stack up on the two possibilities????

any thoughts helpful.

Mortgagehero

Can you give me an idea of the value of your friends property?

Mortgagehero

Ingnore that request, spotted it.

Burlesque_Babe

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Mortgagehero

Hi Keren,

Stroud and Swindon BS have a 3 year fixed rate at 5.7% with a fee of £799 giving a monthly payment of around £659. Looks to be one of the most competitive deals in this instance.

Had a look at Barclays for you and it appears that their most competitive 2 year fixed deal is at 5.59% with a £995 fee as oppossed to the 5.19% deal that you mentioned. Where did you get that info from?

Mortgagehero

By the way, the Stroud and Swindon deal mentioned also has free legals and no valuation fee.

MarkyMarkD

I don't believe that Barclays can be offering 5.19% with that fee.

The Abbey deal is completely pants and there's no point staying with them based on his circumstances. But having the secured loan complicates matters.

Why is he so averse to consolidating it? He could still pay it off over a sensible period - or, indeed, set the repayment term on his entire mortgage to manage away the secured loan part over its current term.

If he doesn't pay it off, other lenders are going to deduct it from how much they might otherwise have lent him, and they are also going to (probably) seek for it to be subordinated to their advance which might cost something in legal/other fees.

herbiesjp

Plenty of deals better than the Abbey one offered.

He could consolidate the secured loan, and take it over the same term that is still oustanding, rather than the 22 years left on the mortgage. So that way he clears it off at the same time, but on a cheaper mortgage rate!

Burlesque_Babe

apologies, it is 5.59%, not 5.19% with Barclays.

Cheers Mortgagehero, i'll pass on the info about Stroud and Swindon.

He says that when he took the loan out with Barclays, they said if he didn't make a claim on his PPI for x years (not sure how many years the x years is) and he didn't repay early, he would get a cashback sum of x thousand (3,000 Ithink he said).

Now, that sounds all a bit odd to me (particularly with all the PPI mis-selling stuff going on at the moment) but that's what he reckons he has signed to when he agreed to it in his branch when he took it out.

However, I also agree the Abbey deal is pants as he has been a customer for a while, so I'll pass on the info.

Mortgagehero

No problem Keren, glad to be of help.

MarkyMarkD

I don't doubt he has some sort of cashback PPI deal.

They are just a scam to prevent you:

(a) cancelling the PPI
(b) claiming on the PPI
(c) redeeming your loan early.

Having said that, once you've got into that foolish boat, it is often better to stay in it than to redeem early and lose the cashback.