Is this mortgage arrangement considered normal? Any cons associated with it?

maxxpayne

Hi Everyone,

We're in the process of purchasing our next home and as part of that selling our current home.

The only challenge is that our current home still has almost 2 years left on the fixed term, so if we exit, we'd have to pay an early repayment charge aka ERC.

Our mortgage adviser is recommending the following for our new property. In both instances mortgage will be provided by HSBC.

• Port existing mortgage to new property (approximately 105,000 at 5.24%)
• Top up at 4.3% from HSBC

Calculation:

• Existing Part - 5.24% @ £104,000 = £611
• Top Up - 4.30% with £999 fee @ £296,000 = £1583
• Total per month = £2194
• Total Cost over 24 months = £52,656

In addition, apparently HSBC tends to have the best rates for existing customers (our LTV would be 50%), so that was another reason for this choice.

In comparison, New Lender - Santander:

Calculation:

• 2 Year Fixed - 3.99% with £1999 fee - £2070.38
• ERC - £3,500
• Total cost over 24 months = £49,689 + £3500 ERC = £53,189

Questions:

• Is saving 500 over 2 years worth it, on the assumption that we'll have a less stressful rate switch after the fixed deal expires with HSBC as we'll likely find a good rate with HSBC?
• Is having two mortgage account considered something odd/detrimental?

Thanks.

silvercar

Looks fine and fairly standard.