Remortgaging - Why does my interest rate from my mortgate advisor seem so high?

ccskitten

Hello


I'm looking at remortgaging as my fixed term is coming to an end in Feb 18 and I want everything in place to switch on the day.


I've contacted my mortgage advisor who has had a little look and has come up with a mortgage with a 1.7% interest rate! We have a 63% LTV and need to borrow £183k and my house is worth £290k but I need to get valuations done.


OK so bonuses with the mortgage that he has found is there are no start up fees, no valuation fee and also £350 cashback on completion. However the repayments are £814 per month.


Looking on comparison sites (MSE in particular) I've seen the Yorkshire Building Society 2 year fixed at 1.14% interest and repayments at £701 a month. Yes the fees are £1265 but surely its still a better deal.


Saving £113 a month over 24 months = £2712
minus £1265 fees = £1447
minus £350 cashback = £1097 cheaper


Am I missing something? I know having a mortgage advisor can be worth its weight in gold when it comes to the stress of going through a remortgage but surely he could find a better deal?


Is it usual for a mortgage advisor to come up with higher interest rates than on comparison sites?


ccskitten

SouthLondonUser

You cannot just compare the difference in total instalments. An instalment is capital + interest. The interest is a cost. Capital is, in a way, money you are paying back to yourself as it adds to your equity and therefore to your wealth. Comparing the cost of interest and fees is a more appropriate way to determine how much more you are really paying.

As for the rate, you don't elaborate on your situation: income, job situation, adverse credit, expenses, etc.

amnblog

Have you asked him?

You don't just take a rate off the shelf. The lender has to agree to let you have it.

AnotherJoe

ccskitten wrote: »

I've contacted my mortgage advisor who has had a little look and has come up with a mortgage with a 1.7% interest rate! We have a 63% LTV and need to borrow £183k and my house is worth £290k but I need to get valuations done.

OK so bonuses with the mortgage that he has found is there are no start up fees, no valuation fee and also £350 cashback on completion. However the repayments are £814 per month.


Looking on comparison sites (MSE in particular) I've seen the Yorkshire Building Society 2 year fixed at 1.14% interest and repayments at £701 a month. Yes the fees are £1265 but surely its still a better deal.


Saving £113 a month over 24 months = £2712
minus £1265 fees = £1447
minus £350 cashback = £1097 cheaper


Am I missing something? I know having a mortgage advisor can be worth its weight in gold when it comes to the stress of going through a remortgage but surely he could find a better deal?


Is it usual for a mortgage advisor to come up with higher interest rates than on comparison sites?


ccskitten

ballpark - 1.7% additional cost = cost of the interest difference (1.7-1.14= 0.56%) x 2 x £183k = £2,050 minus the £350 = £1700 more.

Now subtract (£1265 fees plus maybe £200 valuation) = £235 better off with the lower rate.

So, it is better but not by the margin you calculated. Also, are there any other fees to pay?

Another way to look at it, you say your monthly cost on 1.7% is £805 but its "really" a fraction less than that, its £805 minus (350/24) = £791.

And the mortgage thats £701 is "really" £701 + (£1265/24) = £754 plus cost of valuation/24.

Thrugelmir

ccskitten wrote: »

Saving £113 a month over 24 months = £2712
minus £1265 fees = £1447
minus £350 cashback = £1097 cheaper


Am I missing something?

Minus valuation fee.

Boredatwrork

Yorkshire Mortgage best deals are 65%, offering roughly similar deals to other lenders who are often 60%, so they are a good place to start as that has a better chance to get you over the line.

They also do fee free deals (bar an admin charge of £70ish), go to their website enter your details and tick the "no product fee" box

In regards to your valuation, many current lenders also revaluate every quarter (based on their own internal system, obviously not as good as a proper valuation, but still handy (especially if you are sticking with them, so give them a call and ask them what they currently value your property at,how much you owe and what the LTV is currently, takes 5 minutes costs nothing.

dimbo61

check how much YBS charges for a valuation ?
You need to put the figures into whatsthecost website to work out how much you will owe in 2 years

Boredatwrork

check how much YBS charges for a valuation ?

YBS Fee free includes free valuation as do some others.

ccskitten

Thank you for your help. I will certainly do some of my own investigation before going ahead with anything. Good to see the things I was missing.


I've also noticed some errors on the illustration so that would probably make a difference to the monthly payments. It's good to have peace of mind.

HangTime

ccskitten wrote: »

Saving £113 a month over 24 months = £2712
minus £1265 fees = £1447
minus £350 cashback = £1097 cheaper


Am I missing something?

You also need to factor in the difference in how much you owe at the end of the fixed term. I frequently see people overlook this when comparing mortgages, they just look at how much they have paid out over the period, and ignore how much they have left to pay (assuming it will be the same for both products).

swampduck

You need to use Locoblades' amazing spreadsheet. It lets you put in all the details of any mortgage offers so that you can compare the differences between them and see if paying a fee upfront works out more expensive or cheaper as oppose to fee free but higher mortgage rate etc etc etc.

http://www.locostfireblade.co.uk/spreadsheet/Index.html

Swampy