humour me/educate me

mdori003

Appreciate anyone checking my maths here…apologies for the stream of consciousness but hopefully there is sufficient info there

We have a 2 part mortgage with one lender. Initially was going to go to a mortgage advisor to try and find a way to switch provider but now doubt it is worthwhile (but very happy to be educated).

Part 1 is fixed at 2.17% until June next year – it is the larger balance of 165k. remaining term remaining term 21 years

Part 2 is 3.11% on a smaller balance of 70k – it is due to expire this January and I can access rates now. remaining term 11 years

The best option from my lender is a 5 year fix at 3.69% which seems competitive (1k fee). The 2 year fix is 4.11 or something which is not good (our LTV is 50%).

My initial plan had been to pay ERC on half the mortgage to join them together to be able to access other providers. With STV going up and ERC being 2% I’m now not so sure that makes sense, particularly as rates may increase by the time the ERC runs out on the first part. I’m happy with the 5 year fix on offer but worried that by the time the second part is eligible rates will have risen another percent point or two, particularly having seen the current 2 year offer.

The ERC of 4.7k seem high when the rate is competitive but concern about existing rate. Mind you I’d also be refixing a good rate of 2.11 to something higher but have the higher security.

I’m also assuming (would it be silly to ask) that the bank wouldn’t agree to waive the ERC if I’m refixing to a higher rate in advance of the change? I’d imagine they would say no but have no experience of this -In which case I could join the two together now and know I’d be paying 3.69% and then have one account which I could switch at another point?

K_S

@mdori003 Quick comments -

- Irrespective of moving to a higher rate, I don't expect your lender to waive the ERC due

- even if you did do a product-switch/product-transfer/rate-switch (PT) for both parts (no ERC on one and with ERC on the other) to a 5 year fix at 3.69%, with most lenders you'll still end up with 2 parts albeit having to pay only one product-fee and with the same fix end dates so practically not much different from a single part.

It's impossible to say what will turn to be a better option eventually, but in your place, with the fixes being only 5 months apart, and assuming that it wouldn't be catastrophic if rates went up by 1-2% by late Dec/early Jan, I would perhaps just wait for late December and then look at the whole market for the best rate available at the point. Most remortgage offers are valid for 6 months, so that should take you to end June. With a couple of lenders you can even potentially stretch the offer validity to 7-8-9-12 months allowing you to start looking earlier.

To further reduce your risk, IF your lender will allow you to cancel a reserved PT with no cost implications, you could reserve a PT for 1 Feb and then reassess late Dec/ early Jan whether to do a remortgage (to a new lender and avoid paying ERC) or go ahead with the reserved product-transfer.

mdori003 said:

Appreciate anyone checking my maths here…apologies for the stream of consciousness but hopefully there is sufficient info there

We have a 2 part mortgage with one lender. Initially was going to go to a mortgage advisor to try and find a way to switch provider but now doubt it is worthwhile (but very happy to be educated).

Part 1 is fixed at 2.17% until June next year – it is the larger balance of 165k. remaining term remaining term 21 years

Part 2 is 3.11% on a smaller balance of 70k – it is due to expire this January and I can access rates now. remaining term 11 years

The best option from my lender is a 5 year fix at 3.69% which seems competitive (1k fee). The 2 year fix is 4.11 or something which is not good (our LTV is 50%).

My initial plan had been to pay ERC on half the mortgage to join them together to be able to access other providers. With STV going up and ERC being 2% I’m now not so sure that makes sense, particularly as rates may increase by the time the ERC runs out on the first part. I’m happy with the 5 year fix on offer but worried that by the time the second part is eligible rates will have risen another percent point or two, particularly having seen the current 2 year offer.

The ERC of 4.7k seem high when the rate is competitive but concern about existing rate. Mind you I’d also be refixing a good rate of 2.11 to something higher but have the higher security.

I’m also assuming (would it be silly to ask) that the bank wouldn’t agree to waive the ERC if I’m refixing to a higher rate in advance of the change? I’d imagine they would say no but have no experience of this -In which case I could join the two together now and know I’d be paying 3.69% and then have one account which I could switch at another point

mdori003

K_S said:

@mdori003 Quick comments -

- Irrespective of moving to a higher rate, I don't expect your lender to waive the ERC due

- even if you did do a product-switch/product-transfer/rate-switch (PT) for both parts (no ERC on one and with ERC on the other) to a 5 year fix at 3.69%, with most lenders you'll still end up with 2 parts albeit having to pay only one product-fee and with the same fix end dates so practically not much different from a single part.

It's impossible to say what will turn to be a better option eventually, but in your place, with the fixes being only 5 months apart, and assuming that it wouldn't be catastrophic if rates went up by 1-2% by late Dec/early Jan, I would perhaps just wait for late December and then look at the whole market for the best rate available at the point. Most remortgage offers are valid for 6 months, so that should take you to end June. With a couple of lenders you can even potentially stretch the offer validity to 7-8-9-12 months allowing you to start looking earlier.

To further reduce your risk, IF your lender will allow you to cancel a reserved PT with no cost implications, you could reserve a PT for 1 Feb and then reassess late Dec/ early Jan whether to do a remortgage (to a new lender and avoid paying ERC) or go ahead with the reserved product-transfer.

mdori003 said:

Appreciate anyone checking my maths here…apologies for the stream of consciousness but hopefully there is sufficient info there

We have a 2 part mortgage with one lender. Initially was going to go to a mortgage advisor to try and find a way to switch provider but now doubt it is worthwhile (but very happy to be educated).

Part 1 is fixed at 2.17% until June next year – it is the larger balance of 165k. remaining term remaining term 21 years

Part 2 is 3.11% on a smaller balance of 70k – it is due to expire this January and I can access rates now. remaining term 11 years

The best option from my lender is a 5 year fix at 3.69% which seems competitive (1k fee). The 2 year fix is 4.11 or something which is not good (our LTV is 50%).

My initial plan had been to pay ERC on half the mortgage to join them together to be able to access other providers. With STV going up and ERC being 2% I’m now not so sure that makes sense, particularly as rates may increase by the time the ERC runs out on the first part. I’m happy with the 5 year fix on offer but worried that by the time the second part is eligible rates will have risen another percent point or two, particularly having seen the current 2 year offer.

The ERC of 4.7k seem high when the rate is competitive but concern about existing rate. Mind you I’d also be refixing a good rate of 2.11 to something higher but have the higher security.

I’m also assuming (would it be silly to ask) that the bank wouldn’t agree to waive the ERC if I’m refixing to a higher rate in advance of the change? I’d imagine they would say no but have no experience of this -In which case I could join the two together now and know I’d be paying 3.69% and then have one account which I could switch at another point

Appreciate it. Yes under no illusions arlbout the ERC just thought I'd throw it out there in case anyone had ever had any joy, but then read several threads about ERCs!

That's helpful thank you.  

mdori003

mdori003 said:

 I’m happy with the 5 year fix on offer but worried that by the time the second part is eligible rates will have risen another percent point or two, particularly having seen the current 2 year offer.

I may have underestimated the pace of rates rising!