My remortgage dilemma

bluelaguna44

I am currently 5 years into a 7 year fixed rate deal with Northern Rock. My current interest rate is fixed at 4.99%. The only debt my wife and i have got on top of this is our car loans. We owe a combined amount of approx £12,000. Our mortgage has got 13 years 4 months to run and we owe £72,000. My mortgage advisor has suggested i remortgage for £84,000, technically then we will only have a mortgage. He then said our combined payments for the 2 loans (£318/month) If we carry on paying this amount off the new mortgage on top of the mortgage payment, he thinks i can shrink our mortgage significantly. (Unfortunately not got his calculations until tomorrow)
I am not sure what to do, i don't like the idea of increasing my mortgage because i am trying to pay it off. I also know that if we remortgage now, it is highly likely that we will end up paying a higher interest rate. The other thing is that i will be paying for those cars long after i have swapped them.
These are all the disadvantages.

Has anybody else done this, and has it been a good thing, or has it been a bad thing? If not, has anyone got an opinion on this? If so, let me know.

Michael

dimbo61

dont do it !!!
check with northern rock as you may have exit/ early repayment charges ?
you will not get as good a rate as you have now if you try to remortgage !
if you cant afford the mortgage and 2 cars then sell one or both and buy a
cheap runabout.
start looking on this site about how to live cheaply the MSE way. GOOD LUCK

Trying_to_be_good

Sounds to me like there are NO advantages and LOTS of disadvantages. Why remortgage when you're on a good fixed rate? Pay off the highest rate debt first, as much as overpayements are allowed.

If it sounds daft to you, it's because it is!

G-G_4

Not worth it at all... crap mortgage advisor in my view.

Stick with the fixed rate for now, and when that ends you can shop about for a better rate.

If you are wanting to pay off mortgage then adding on the car loans will not help and also you may end up paying more for them in the long run if the interest rates go above what you are already paying.

Northern Rock will charge you for leaving the fixed rate early, and you arn't going to beat the 4.99% fixed at the moment?

x

dwsjarcmcd

Quite honestly your Mortgage 'Adviser' is only lining his/her own pockets and doesnt deserve to use the title. Run a mile and tell all your friends about them so they can't fall into the same trap

lucasoid

Speaking as a mortgage advisor ..

What rate of interest are your other loans, in particular you car loans?

ie some car loans can be 12-15%. If you get a statement of redemption from them and move you could probably save a few thousand - depending on term etc

You will be able to obtain additional borrowing from the northern rock on top of your existing deal - therefore avoiding any redemption fees.

I would do that for the remaing two years then move your mortgage ..

providing the other loans are at a high enough interest rate to make it worthwhile.

You'll also have to find a northern rock product with small arrangement fees, as you don't want extra fees on top of moving.

If you have the discipline to pay extra off your mortgage and as much as you can afford it makes sense to have a larger mortgage in the short term.
It all hinges on the rates you are paying for the other loans and then doing a comparison to see what actually would make you better off.

I'm sure your advisor has it all in hand .. hopefully ending your current deal is NOT what he is recommending...

Moneygoes2money

I am an ex-IFA, definitely don't do what your mortgage adviser is recommending and ditch the adviser.

If you remortgage you will incur a sizeable early repayment charge from Northern Rock, you may have to pay fees for the new mortgage not to mention the adviser may charge you a fee also.

By adding the unsecured debt to your mortgage you are securing the debt against your home, which places your home at risk in the event you are unable to meet payments. Although the interest rate on the proposed new mortgage may be lower than existing unsecured loans, by adding to mortgage you will be paying back over a longer period of time thereby making it more expensive in the long run.

lucasoid

but if the intention is to remortgage in two years and the debt is cheaper than the car loans your advice doesn't really apply.

It seems the householder is looking to pay off the mortgage early as the original poster stated!

If the overall cost is cheaper over the next two years then it is a good deal - the householder will know their own finances but being proactive is part of that. Then when the northern rock deal ends Michael can remortgage. He can make extra payments or add to his savings in the meantime if the extra lending from northern rock results in less outgoings for the next two years.

To me you don't have enough information to say 'don't do it' ie how much will be saved by repaying the car loan early,what interest rate is it etc