Mortgage Help!!!!

matt1987

Hi All, I am currently just over 1 year into a 5 year fixed deal with Natwest. My interest rate is currently 1.74% and I owe £174000 over 25 years.

We have decided that the time is right to move to a bigger “forever” home in a nicer area. We are looking at borrowing another £100k - £125k on top of what we already owe and extending the term to 30 years (Still brings the mortgage to an end before retirement).

I am trying to work out what is better – porting the mortgage and taking out extra borrowing with the same lender, or going to a completely new lender, taking advantage of the lower interest rates but paying a hefty ERC.

I have worked out that the penalty for moving is 4% which equates to around £7000 as it stands.

I have spoken with my current provider who state that my current deal would be left as it is (so 1.74% on the 4 years left and then a new product would be set up for the extra borrowing alongside it at 1.59% on a 2 year fixed.

I have had a mortgage advisor to the whole of market search to see what deals are out there if I paid my ERC and added this to the mortgage so effectively having a lesser deposit on the new home. Its turns out that the interest rate with another provider would be 1.39% with a £1000 set up fee.

This works out on a £475000 home as around £1034 per month where as if I were to stick with Natwest it would be around £1057 a month plus part of the borrowing would only be on the 2 year fixed (assuming I would have to re-mortgage this part of the loan in 2 years and then after 1 further year re-mortgaging the original loan I have currently, thus never actually being tied together).

I have had a mortgage advisor say that the better option would be to port the mortgage over on Natwest, stick with the higher interest rate and then take a new product with natwest to cover the extra borrowing at the lower interest rate, but the monthly payments are higher doing it this way. Is there something I am missing?

Would it start to get expensive and confusing by sticking with my current lender on two different products, ending at different times?

Any help/advice appreciated!

ACG

Are the monthly repayments higher on the part you are porting as the term is 25 years and the additional borrowing over 25 or 30 years? 

Its highly unlikely it will be cheaper overall to pay the ERC with Natwest, but if they can not alter the term, it might be your preference to do that? 

Thrugelmir

matt1987 said:

 

Would it start to get expensive and confusing by sticking with my current lender on two different products, ending at different times?

You are going to pay more interest by extending the mortgage term in any event.  That's in addition to the £7k you are going to borrow to exit the existing product. 

matt1987

So the part I’ll be porting will go from 25 years to 30 years and then the new product will be over 30 years too (after 5 years I’ll reduce it then to 20 years).

So as a like for like over 30 years the monthly payments seem lower over the next 5 years on a new product but paying the ERC than if I were to port my existing and take out additional borrowing - if that makes sense?