Staircasing & Early Repayment Fee

haras_nosirrah

Knowing what I know about Leeds rates I am pretty certain you will be better off switching.

It looks though as though the lenders won't get you to 290k from what you have said (you said santander will lend 242k)

Are you considering a partial staircase?

Jadakiss

Current mortgage the details needed:
£75,000

Outstanding amount:
£75,000

Outstanding term(full and fixed period):
18 years, 9 months

Rate:
4.29

Payment:
£490 a month (mortgage), rent and service charge £450


ERC:
£3,500

Also how long have you owned the property and was it newbuild on purchase:
Newbuild, bought in Sept 2014

Also do you have enough savings to cover stamp duty and legals:
Stamp duty paid in full at time of purchase, I have enough for legals but not ERC at the moment; but perhaps could beg, borrow or steal if it's worth moving now.

Are you considering a partial staircase:
Yes, would like to go to 100% but if not possible happy to go up to what I have been quoted on; between 75 - 90% with the potential to go to 100% depending on whether the housing association allows 100% ownership (they do)!

Santander based on initial affordability - 242k. I don't have the rates, term is 25 years (will find out on Monday)

Leeds based on initial affordability (without details, they will do that during appointment) is £204,000. I don't have the rates or term that was based on.

I hope that is clearer!

haras_nosirrah

without knowing things like income and commitments it is difficult to say whether another lender would lend you what you need to get to 100% but I would expect payment wise alone you would be better paying the fee. You have a high existing product rate and leeds aren't known for being competitively priced in the shared ownership arena.

getmore4less

I did some numbers but lost my post so here is the summary.
Your equity shares, LTV and borrowings with the given numbers are a bit mixed they don't all match up.

but condensing to the key can you save money

if we look at Leeds with their £204k lending.

if that was at a generous 4.29% 5y fix over 25years
Santander same amount+ fees(£4,500) 5y fix rate is probably going to be 2.34% depending where the LTV sits.

you are probably comparing something like

£204,000 4.29% £1,110pm
£208,500 2.34% £919pm

make the payments the same, in 19 months when you would have been ERC free you are £600 behind and at 5 years £4,800 ahead.


Depending what Leeds can offer over shorter terms switching may work out more expensive but capturing a 5 year rate now may be beneficial.

If going longer term will allow more borrowing that may be worth considering to get closer to 100% as one of the goals is to capture equity gains.
£290 35years @ 2.34% is £1012pm

Bottom line is what do you think you can afford a month as the options to get to 100% are looking like they are going to be more than the current mortgage and rent.

Jadakiss

Perfect, I think I was a bit obsessed with staying at 25years for the term but if adding an additional 10 means I can get to 100% that would be worth it. At the moment my mortgage is £1000 per month and I could afford £1200 a month.

Thanks for all your help and advice thus far, I'm leaning towards switching! I will update with exactly what Santander are offering vs Leeds once I have my call with them next week.

Santander LTV: 70% and Interest Rate: 2.4

The broker is saying that the money would be leant on the basis on me going back to work full-time when my maternity ends and that they would ask my employer for confirmation of that. Ummmmm, I don't want to go back full-time.

Jadakiss

I've had a discussion with Leeds today and my understanding is that they don't staircase to 100%. They also unlike Santander do not take maintenance and child tax/child benefit payments as income. The maximum I can staircase to is 70% and they will lend me a further £105,000. This second mortgage will run alongside my original one of £75,000 with interest rate to be confirmed.

The only fees I need to pay will be valuation and solicitor fees. I am waiting to see if I pass the credit check and will proceed from there.

Thanks for your help!