First Remortgage in process, a question please

linzi_lou

We’re in process moving from Halifax to Barcleys. We’re taking £6000 out and also adding 10000 credit card debt to it which will form a 2nd part for 5yrs.
We’ve opted for a 3yr fixed but the 2nd part will be for 5yrs. Our rate currently is 2.05% on both parts.
We choose 3yrs as we may want to extend our house at that point. There was an option for 5yrs at a slightly higher rate (can’t remember exactly but the monthly cost was £8 more a month)

We just have to send our 3 months of bank statements and then it will be progressed.
I’m just unsure if we’re doing the best thing. The overall payments with mortgage & cc combined is slightly lower than currently & he said we will lay about £500 in interest on the cc side of it. Where as now I’m on 0% but keep paying transfere fees when 0% ends and only pay min payment so will take more than 5yrs doing it this way.
Also hubby has paypal credit and he is crap at managing money hence I do it all. His payments keep bouncing, not sure why, possibly if he dosnt have funds in his account but he does have an overdraft.
So this is going to effect his credit history badly if it continues to happen, it is now twice. He’s also paying interest at either 17 or 19% apr. So I’d be very happy to get rid of this.

I do wonder though, what will happen in 3yrs, as we will need to get both parts on a new rate. I know no one knows what’s going to happen to rates but don’t want end up paying a lot more for the cc debt if rates go up. Plus the fact we might want to take a large chunk out to extend which will likely mean rates won’t be as low as we will be borrowing more. So will that effect the rate we can get for the 2nd smaller part of the mortgage?

Would we be better fixing for the whole 5yrs so we know what we’re paying till he end of the 2nd part. Barcleys said we can still get extra funds to extend or move etc even during a fixed rate period.
I’m just not sure about this part.

5yrs makes me feel uneasy as it’s a little longer than we’d planned to be able to extend (although if true what they say it shouldn’t be a problem but obvs tied to Barcleys only for a lot longer, cutting ourselves from potentially better deals & not sure how it works taking extra when in a fixed rate)

3yrs makes me nervous as I’m unsure what will happen at the end, (as is everyone I realise) mainly because we’ve added a big chunk onto the mortgage by adding the cc, although at the 3yr mark shouldn’t have times left to pay off. And maybe it will still work out better than what we would have been paying if we stay the same as we are now. Even if rates increase abit.
Then we will have more options when we come to extend.

Can anyone offer any words of wisdom or experiences in 2 part mortgages or any of the above?
We saw them last week & their waiting on us sending the docs so really want to get it sorted soon. Also 0% on cc ends in sept so need to get that cleared before then!

Thanks.

[Deleted User]

Have you gone directly to Barclays to arrange this? If so why? There are like 20,000 mortgage products available in the market and barclays have about 10 of them.

I don't see a benefit in doing 2 separate parts personally. Either you want the security that a fixed rate brings, or you don't.

If you have seen a broker and explained al these plans then I'm surprised this is what has been the outcome.

Why not just do the whole lot on 2 or 3yrs and remortgage to release equity for home improvements then?

How about a flexible fixed with no penalty to come out early? That way you get the security of a 2 or 5 year fixed and the ability to come out penalty free.

I suppose it's a case of how much research did you do and why did you go down the route you are doing?
If you saw a broker and you are this uncertain about the path you are on then the broker hasn't done a very good job advising you

linzi_lou

Thank you, i had no idea, the whole process was overwhelming & I was trying to sort all out by myself with no advice from anyone. So just lots of googling etc
In fact we have been on svr for 8 yrs! As I knew no different, our initial fixed rate 10 yrs ago was very high, when it went to svr the monthly payments dropped by nearly £250 a month so I was very happy with that, not knowing we could of saved more by fixing.

It was only when we got our house valued last Nov that the adviser said why aren’t we on a fixed rate and showed us what we could be saving.

I thought going to a broker felt hard, didn’t no where to start, didn’t like the idea of paying fees, wasn’t sure about doing it over the phone etc
So I did my own research on comparison sites for rates, then went to our current provider who couldn’t give what we wanted. So then went to Barcleys as they came out the best for rates and no fees for solicitor or product fee etc.

When we went, the whole thing was more straight forward than I’d feared, I thought we would have to arrange solicitors, have house valued etc but they sort all of that and no need for house valuation.

We initially went Wanting to go onto a fixed rate to save us £100pm and take out £5-6000 tohelp cover mat leave & small home improvements.
He suggested adding the cc to mortgage so it was something I’d not considered so it was a quick decision based on what he was telling us.
Which did seem to work bettter than our current situation.

I’ve come away and thought about it and looked into it abit and I do think it seems the better option as we will be paying less pm than we are now plus it’s paid in 5yrs. I was just unsure what will happen in 3yrs time when fixed rate ends. Well I guess we will go onto a new rate and no one knows what that will be so that’s the risk, unless we fix for 5yrs which covers the term of the debt. But not sure about our plans to potentially extend before the 5yrs been effected by been in a 5yr fixed.

He offered to put the debt over the whole mortgage term but I decided against that as would of ended up paying £3000 interest! I’d rarther it be gone sooner but within our means.

As you can see I’ve found it hard with having no experience and made a big mistake in staying on svr for all those years! So I’m just trying to make sure I don’t make a similar mistake again.

I’m not sure I want to go looking around for more products though, it’s abit of a stress and been 6 months pregnant. Unless I’d be likely to get a much better deal, but I did think what we were offered was good (albeit in my inexperienced view). We had a 55% ltv and got a 3yr fixed at 2.05% but that’s with the £16000 added on which increased our ltv but still under 70%.

[Deleted User]

I misunderstood a out your split terms. I thought the debt was over the mortgage term but on a 5 year fixed with the rest in a 3 year fixed.

What you have done makes a lot of sense but it does leave you with only a single option when it comes time to do the renovation work. Either stay with barclays on whatever terms they offer or leave and pay a penalty on the cc borrowing bit as you'd be breaking the terms of it.

How about putting the debt on a 5 year mortgage term with a 3 year product fix?
That way both bits always need renewal at the same time but you can still structure your mortgage to repay credit card debt within the 5 years

It will come down to 2 things:

When do you plan to do the renovation (especially with child on the way)
When you do that do you want to be able to shop around the whole market for best deal or happy to take whatever barclays give you? (you've already fallen victim to this bit once)

We'll done on doing so much good research though. And it's good to doubt yourself to make sure you are doing the right thing

Also congrats on the new arrival! From someone who renovated a house with a newborn, try be realistic about how much you expect to get done and how soon you will have rh energy to start it. I wish I held off another year in hindsight

linzi_lou

Thanks, I hadnt Realised we may be tied to Barcleys for 5yrs with the debt. I thought after the 3yr fixed is up we will be free to move to wherever with both parts, I will have to check this. I did email and ask and he came back with this-

You would have to put the part that finished in 2 years' time on a 2 year max term product. However the other part could go onto the same 2 year product or a different rate with a longer term.

So we have the debt over 5yrs and that, and our main mortgage are on a 3yr fixed rate currently (or will be). At the end of 3yrs we will have 2 more yrs to clear on the debt plus our mortgage.
We will likely want to take a large sum to extend- which will likely have us facing higher interest rates unless we manage to stay within 70% ltv. But bearing in mind our monthly payments will drop after 2yrs wen debt is paid.

I think it’s kinda the same as having 1 product but just down as 2 parts on the mortgage so I prob need to look at it the same way as if I hadn’t added the cc to it in re to his long to fix for.
Our original plan was always 3yrs fixed- to give us options at that point, we will likely need another bedroom by then so will need to extend or move.

I guess I’m just thinking about it more because of the added cc to it, we’ve added them to get them paid quicker and cheaper, I don’t want to end up on a higher rate for the last 2yrs of the term and with taking out more money had worried the interest rate would be higher. But from what he said we could put the debt on a different product which might have a lower rate, I’m not sure.

Or if we fix for 5yrs both parts will be fixed for 5yrs so when term ends cc will be paid and back to only 1 part of the mortgage. It’s just the plans to extend before then.
I guess if we decide to extend in say 3-4yrs we could continue on the last 1-2yrs with Barcleys then be open to other offers. But I don’t know how that works, when already on a fixed rate and take out more, would this then be classed as a 3rd product and go on a different rate or would it be added to our existing fix pec rate at that rate.

Sorry for all the questions, think I’m getting abit confused.

[Deleted User]

Why not just stick the cc on a 0% card and overpay by the amount you would be doing on the mortgage?

All you are gaining otherwise is securing previously unsecured debt against your home.

If both parts are on the same 3 year fix then it's not going to cause you too much hassle when you come to remortgage and take more for renovations.

You'd just increase the balance of your main mortgage on whatever fixed term you choose for that, and then a 2 year fixed rate with the new lender for the last 2 years of the cc bit.

Sorry for confusing you, I got mixed up with your original message

getmore4less

Term does not decide the cost payments do.

What you are doing is paying of debt to borrow it back again in 3 years if they will let you.

Simplify by putting your current proposal in simple terms for each bit.

Amount, rate full term fixed term, payment

Then how much you plan to borrow to extend.

linzi_lou

Thanks for all the help. I think we’re going to stick with the 3yr plan. It’s not as straight forward as paying more on a 0% cc as I have or would have 3 cc come sept if we don’t put it on mortgage (due to keep transferring for 0% deals, switching between the 3, doubt I’d get another 0% card win a longer 0% either) So that means 3 lots of transfere fees every 12-18 months. Plus hubbys PayPal credit that he’s charged interest on.

It’s hard to get all the information down for you to be able to give me solid advice but I think after writing it down & having some other suggestions, it seems this is the best option. Thanks again.