Remortgaging with Santander fix rate ending

aussie_in_wales

Hi MSE,

Apologies in advance if my questions seem stupid! This is my first time remortgaging.

I have a 2 part mortgage as I ported my previous mortgage to my new house and the extra money needed to buy the house onto my mortgage in the form of an additional mortgage.

The smaller part of that mortgage is now coming to the end of it's fixed rate.

I'm with Santander. The property is in an area which has seen a relatively large increase in prices in the last 20 months. My neighbours property which is the same as mine has just sold for £30 000 more than I paid for mine.

Anyway I've gone online to look up a new rate, preferably fixed for that part of the mortgage. I was surprised to see that to get a slightly higher rate than I'm on now (1.69% new Vs 1.64% existing) I will have to pay an application fee of £999, and if I don't want to pay the fee then my interest rate will go up from 1.64% to 1.89.

Even the variable rate is 1.59% with a fee of £999.

It's my first experience of remortgaging so this just be my misunderstanding of the process, or it may be that interest rates have risen in the past 20 months.

If it helps I paid £165 000 for the house, remainder on total mortgage is £77 087 and on the part I'm looking at re-fixing, £30 456.

So two questions:
1. Is it normal for Santander to charge such a high fee for a remortgage? I didn't pay a fee at all for either of the initial mortgages.
2. Are interest rates just rising so I should expect to have a higher interest rate than originally even though I have more equity in the house and the prices in the area have increased?

Thanks for any help/advice you can provide

kingstreet

The retention (not remortgage) products offered by lenders to their existing borrowers are often not as good as they offer to new borrowers remortgaging to them or to purchasers.

Unfortunately, it's take it or leave it.

If you can, stay on follow-on rate until your other sub account is due to expire then remortgage away to a new lender.

aussie_in_wales

Thanks kingstreet I hadn't though of that being another reason.

The other part of the mortgage ends in January 2020 so I may just do as you say for 8 months then remortgage to another lender.

Thank you