Re-mortgage with First Direct

Itsadogslife_2

I am just looking at re-mortgaging our current fixed rate is about to shortly expire.

I am looking at this:

http://mortgages.firstdirect.com/mortgage-rates/product/10-year-fixed-repayment-fee-saver-19-1

10 year fixed rate with First Direct for 2.49%. With unlimited overpayments allowed, I can't see a reason not to go for it? I don't think there will be many opportunities to get 2.49% fixed for 10 years.

Whats the worst that can happen? Any thoughts or opinions?

cjmillsnun

IMHO that's a bloody good deal. It's not like rates are going to drop. There is only one way they can go and to have a fix for that long gives you a lot of certainty.

Spangled

"Whats the worst that can happen? Any thoughts or opinions?"

Although the 10-year fix gives you certainty of monthly payments for the next ten years, the risk is that in the short term you end up paying thousands more for your mortgage compared to a shorter term fix.

For example, FD offer a two-year fix (with fee) for 1.14%.

The difference between paying 1.14% and 2.49% over two years could be significant, depending on the size of your mortgage. You could overpay on the 1.14% rate to the level of the 2.49% and reduce your mortgage balance quicker (and insulate yourself against rate rises).

*If* the base rate stays the same you could then remortgage after two years on a similarly low rate. Maybe!

You need to post some numbers - size of mortgage, LTV, years remaining on mortgage, ability to make overpayments - and then ask a poster like getmore4less to crunch the numbers...:)

My general point is that long fixes - just like all other sorts of mortgages - are not without risk as they come at an interest rate premium (plus generally have high early repayment charges). I found out that to my cost myself between 2011 and 2016 when I was on a five-year fix for 3.59% (a good deal in 2011 but poorer value as the years went on)...

Good luck!

getmore4less

to put those thousands into context.

100k over 20y @ 2.49% £530pm

compare against a 5y& 2y no fee.

term, amount, rate, owing 2 & 5
10y £100,000 @ 2.49% £92,073 £79,417
5y £100,000 @ 1.94% £90,994 £76,812
2y £100,000 @ 1.59% £90,313

zagubov

We've had very positive experiences with FD mortgages. Can't see us switching to anybody else now (we had looked but the grass isn't greener with anybody else). We're currently on a shorter fix with no fees, but we already know they offer better deals to existing customers to keep their business.

Wobblydeb

I would also factor in the early repayment penalty. If there is any chance you will want to change mortgage in the next 10 years then that could really cost you.

I am 4 years into a 5 year fix with FD and want to move house. I am happy to take out a larger mortgage with them, and they're happy to lend me more money BUT...... they will not waive the early redemption penalty (£3.6k in my case)

The mortgage IS portable though, so will be moved to the new property and then I will get a separate mortgage for the balance. It does mean being stuck with FD however, as they will not agree a second charge being taken on a property.

Itsadogslife_2

getmore4less wrote: »

to put those thousands into context.

100k over 20y @ 2.49% £530pm

compare against a 5y& 2y no fee.

term, amount, rate, owing 2 & 5
10y £100,000 @ 2.49% £92,073 £79,417
5y £100,000 @ 1.94% £90,994 £76,812
2y £100,000 @ 1.59% £90,313

Thank you so much for this. Our figures are: house value is £290,000, outstanding mortgage £158000. Looking at term of 18/19 years.

I may receive some inheritance in the next 10 years but definitely not enough to redeem the mortgage in its entirety, therefore this mortgage appeals with the ability to make unlimited overpayments.

sebtomato

Wobblydeb wrote: »

I would also factor in the early repayment penalty. If there is any chance you will want to change mortgage in the next 10 years then that could really cost you.

Unlimited over payments without charges, and no early payment penalty.

Basically, it looks like this 10 year fixed rate mortgage from FD has got no drawbacks whatsoever, and no fees.

Wobblydeb

sebtomato wrote: »

Unlimited over payments without charges, and no early payment penalty.

Basically, it looks like this 10 year fixed rate mortgage from FD has got no drawbacks whatsoever, and no fees.

I would check your understanding with them. I've looked at ways of reducing that early redemption penalty by making a large overpayment, and even talked it through with FD.

The early redemption penalty kicks in if the mortgage is paid off in full before the end of 10 years - i.e. if you remortgage.

The early redemption % applies to the original borrowing value, not the amount remaining.

clairebeth

We have just commited to this same deal (at 75% ltv, so 2.64%). We are happy with it, and very happy with the customer service we have received. It DOES have an early repayment charge. I think it's 5% of original balance in year 1 and then 2% of original balance in years 2 to 10. It has unlimited overpayments, except you can't pay it off fully in that ten years. What you can do, is pay it down to a small amount and then have your payments recalculated to say £50 a month or whatever. (I specifically asked about this).

So the pros are: no fees, not having to pay remortgage fees for ten years, unlimited overpayment, locking in a very good rate and knowing we can afford (and hopefully pay off) our mortgage for the next ten years. And it IS a good rate, it's not the lowest out there, but it's still pretty fabulous. We bought our first home in 2009 on 6.04%! 2.64% locked in for ten years is not to be sneezed at!

Cons are: the ERC, paying higher rates than if fixing for shorter period (and I and getmore4less have done the maths on my £168,000 mortgage, the lower rates do make better maths sense, have a look at my other threads), also the feeling of being very committed to your current home (although it IS portable).

I think it's really about your personal circumstances, only you can decide what's best for you. For me, the thing that made my decision was I realised how much this was keeping me up at night. We have young children, we are exceptionally happy in our current home and never want to move, and as much as I would love my hubby to contribute to financial decisions and budgeting, he has no interest whatsoever, so these things are entirely left to me, and they literally keep me awake for hours, because I don't want to do the wrong thing by all of us. So we really are paying for peace of mind, and it's worth it for me.

What I'd like is to try and pay it off entirely in that ten years. You pay by standing order and can increase it as you like, or you can have two standing orders, one for the monthly payment and one for overpayments. That's what the lady on the phone told me anyway, it's all being set up as we speak!

Good luck!

zagubov

My parents had a 25-year fix. They was very rare back then (and unheard of now) but they found it reassuring (and interest rates did rise quite a bit after they'd taken the fix). They never regretted it due to the peace of mind. They were however in their forever home and it was difficult to see a need to move.