Remortgaging a 'split' mortgage (dates vary)

thigger

My wife and I took out our first mortage with Scottish Widows (terrible service) in Aug 2006. We're both junior doctors with a decent income; and needed a 69% LTV to buy our home. At the time we arranged a 'split' whereby (a) ~£165k was at a fixed rate 4.79% until May '08 and (b) ~£60k was at a tracker rate (BoE + 0.5%) until Aug '08, with an offset facility (which we've not really ended up using).

Part (a) has an ERC of ~£5k and (b) has an ERC of £1.2k - however they expire on different dates (May for (a) and August for (b)). Obviously remortgaging the whole thing in May will result in a loss of £1.2k; whilst waiting until August will result in part (a) going up to the extortionate SVR of 7.19% for 3 months.

Can anyone think of a solution? Ideally I'd like to take out a new mortgage (without splitting this time) and have the new company pay off Scottish Widows in 2 installments; thus missing both the ERCs. Or would they be prepared to let us stick the second part into the offset of (b) until the ERC expires? Or are we just going to have to wait until August?

Thanks for any advice

apk1

you will not be able to pay off in 2 instalments, if you speak to Scottish widows, they may be able to transfer the forst part to a better tracker rate with no penalties, but watch the fees against potential savings.

Whose idea was it to set up the mortgage on 2 deals with different dates ? seems madness, unless you stated you were expecting a lump sum to clear the first part at that time ?

dwsjarcmcd

As has been said, no you won't be able to do this. Your only option, if you want to remortgage is to calculate when the best time is to remortgage, either May or August. If paying 7.19% for 3 months is cheaper than £1,200, then do it in August, if not, then May.

thigger

Bum. Thanks for the advice. It was a mortgage adviser's idea - it was never mentioned that the dates were different and I guess I naively assumed "2yr fixed rate" meant 2yrs from the date we took it out (For this and other reasons I'm not keen to go back to him). I'll try getting on to Scottish Widows and see what they'll do.
Looking at the numbers it's going to be best for us to take the hit and wait until August rather than pay £1200 but either way it's a fairly significant loss I'm keen to avoid.