2 tasks in one process

chinesewhispers

Hi there.

I bought a property on Feb, a Halifax Tracker (.35% over base for 2 years). Property was 84,000 and took a 90% mortgage.

Rate is currently at 5.1%.

Since then my partner has moved in (she was a student at the time so wasn't put on the mortgage) and now contributes to the payments.

The situation: Obviously we would like both of our names to be on the mortgage. We would also like to increase the mortgage to fund central heating, cellar conversion and a couple of other minor things.

So, I asked the Halifax how best to do it, they said that adding another person to the mortgae is £160, plus £50 deed release, plus solicitor fees. An application for extra funding if done at the same time would be included in the fee. The additional lending though would be at a higher interest rate, almost 6% I think.

I am not sure though whether to look for a lower rate mortgage with another provider.

My current mortgage has no redemption penalty, but carries a £100 fee I believe.

So is there a better alternative for me? Would it class as a remortgage if I am adding another person to it at the same time would this complicate matters or add extra fees?

I am looking for a good rate, doesn't have to be fixed, discount would be good. Minimal fees and low or no redemption penalty.

Joint income totals approx £40,000 and the property must be worth at least £130,000 if not more. Outstanding loan is just under £75,000.

Many thanks in advance for any input you can offer.

chinesewhispers

Been having a quick look around. I can handle redemption fees on a low fixed rate over a short term. I reckon that If the rate is reasonable, I won't want ot change within that period, and therefore should not matter.

Been looking at the Nationwide fixed at 4.95% for 2, 3 or 5 years. What are people's opinions?

Also, getting mortgage promises from several providers (seeing if you will be accepted), can that harm credit files?

If we have been turned down previously for a mortgage by a specific provider, is it worth trying again if the circumstances have changed?

MarkyMarkD

Firstly, are you very sure that there are no redemption penalties on the Hfx product? It's quite a cheap rate, which is why I ask.

If you are certain that there are not, then it might be worth remortgaging. The legal costs will be slightly higher than a straight remortgage because of the transfer of equity, but I doubt it will make a huge difference.

Nationwide's 4.95% fix is not bad value, but swap rates have fallen 0.30% in the last month or so and fixed rates will be following them down to some extent. I wouldn't rush into a fixed rate this week if I had no reason to rush. The flat yield curve means that there is starting to be a tendency for fixed rates to be the same irrespective of the term, which has been unusual in recent years.

I agree with you about penalties within a relatively short term not being unduly concerning ... but I'd get a product which allows over-payments if possible, unless you doubt you'll have any spare cash at all over the next few years. Many products with penalties still allow up to 10% repayments of capital free of penalty each year.

With Nationwide there is a £500/month limit on overpayments, rather than 10%. This may or may not matter to you! Probably not given your relatively small loan.

chinesewhispers

I'm sure there are no redemption penalties, and it's fully flexible.

I can't see on the Halifax web site at the moment, the area of mortgage rates etc, but the comparable one is a fully flexible mortgage at almost 6%, (the offer of the extra lending has the same terms as the current lending, just with the higher rate).

The Nationwide also has a tracker rate of 4.75% over 2 years with a deposit of 10%.

Are interest rates likely to fall again in the next two or three years or continue to rise?

You say the fixed rate may fall, what indicates this?

Overpayments of more than £500 should not be much of an issue, especially not in the first 2 or 3 years.

Thank you for your reply. Could you anyone answer the question of previously being turned down by the lender?

MarkyMarkD

Swap rates (which are the basis on which fixed mortgage rates are set) have fallen a lot in the last month; many lenders are still selling fixed rate products priced before this fall and therefore when they reprice, the only way is going to be down from the current rates.

Long-term swap rates are around 5% for 2 years to 5 years irrespective of the term - so the City's perspective is that over any term between 2 to 5 years, about 5% is the going rate. That suggests that interest rates won't move very far at all over this period.

But the City can be wrong, as Martin pointed out in another post.

All things being equal, given a flat interest rate outlook, if you can get a fix for a period you are comfortable with for about the same price as a discount, you might as well go for the fix as your payments (by definition) can't increase.

Most lenders will review your application on its own merits, but the fact you have been declined by anyone will in itself count against your credit score. But if you get referred to an underwriter you may be able to explain why your situation has improved.

chinesewhispers

The change in situation is that my partner now has a full-time teaching job rather than being a student.

I think that is a pretty significant change, I think we'll have a talk to them over the weekend and see.

So you think the 4.95% may drop? Or it may drop with other lenders?

MarkyMarkD

There are already rates below 4.95% and there will be more in the coming weeks.

I can't predict what Nationwide themselves will do - they aren't always best buy by a long chalk, so they may choose not to compete on this particular product. But I would not be surprised if they replaced 4.95% with something better.

lisyloo

IGNORE.

Someone bumping old posts.
Reported.

Poppycat

He is doing it to promote his own signature its been removed once already