Remortgage due in September, planning in selling in...September

purplebiro

Hi All,

I am due to remortgage from my current deal (5.75% fixed 2yr with Mortgage Express) in September. I can reserve a deal now for 6.3% fixed 2yrs with Nationwide FOC (which I'll do, I mean, why not? It's free!) or stick with my current deal which will revert to 1.95% above base rate in September.

However, since getting the quote for Nationwide (through an IFA) I have decided that I will sell up in the autumn and move to London (meaning I will probably be renting, at least in the short term). The quote offers redemption fees of just under £1900.00, my Mortgage Express deal seems (although I haven't had a chance to verify this with my lender yet ) to have redemption fees of (wait for it) £8000.00!!

First of all, will someone please reassure me (total newbie to the world of mortgages in case you couldn't guess) that that £8k fee will not apply if I remortgage with a new lender in September? I'm having kittens here! :eek:

Second, is it likely that that fee will still apply if I keep the mortgage and allow it to revert to the variable rate while I sell the house?

Finally, I am yet to ask my IFA this but is it likely that I will be able to find a mortgage with lower redemption charges than Nationwide is I chose to remortgage?

As it stands I stand to make a fairly meagre profit on my house and it would be a shame to see that wiped out by fees.

Lots of questions here - thanks in advance...

mrtg0525

Have a look at the paperwork that came with your mortgage. This should specify how long the lock-in is (ie, how long you'll have to pay the redemption fee when moving the mortgage). When I looked around most lock-in periods were for the length of the discount period, but on some deals they were considerably longer.

purplebiro

That, wasn't the answer I was looking for

Seriously, though, my paperwork says until 2036 - i.e. the life of the mortgage. I will call for clarification tomorrow but, seriously, they can;t do that, right????

mrtg0525

Weeeelllll. A redemption fee of 8k for the life of the mortgage sounds a bit dodgy to me but if you signed a contract like this it'll initially put you at a disadvantage (IMHO, I'm not even an armchair lawyer). I'd get clarification from the lender first and then take it from there.

Sorry that this may not soudn very helpful...

purplebiro

No, it's pretty much what I expected, just hoped someone would go "nahh, don't be silly, it'll all be fine" :rotfl:

Doozergirl

The advice already given is good, but just to answer some of your specific questions...

purplebiro wrote: »

First of all, will someone please reassure me (total newbie to the world of mortgages in case you couldn't guess) that that £8k fee will not apply if I remortgage with a new lender in September? I'm having kittens here! :eek:

If the tie in is longer than the discounted rate then if you remortgage you will have to pay to redemption penalty if you pay off the mortgage before the tie-in is over. Remortgaging is essentially paying off one mortgage and taking out another.

purplebiro wrote: »

Finally, I am yet to ask my IFA this but is it likely that I will be able to find a mortgage with lower redemption charges than Nationwide is I chose to remortgage?

Absolutely. There are mortgages out there with no penalties. There's often an admin fee to close the account but we're talking hundreds, not thousands and you'll have these to pay even with redemption penalties anyway.

purplebiro

Doozergirl, thanks.

Is it likely that I'll pay a much larger interest rate if I do?

Also, the main reason that I'm reserving the mortgage with Nationwide now is that there is no fee to do so, meaning that if the rates go up in the next six months I'm not goosed - is it likely that I'll find a mortgage I can reserve FOC now with no early redemption fee?

Richard_Webster

Obviously if you have the massive £8K redemption fee for the life of the mortgage then you are stuck with it.

However I would make the point that if the penalty were to end in September and OP planned selling in the autumn even if he could get a no penalty deal with another lender why waste money on application and survey fees? Also it generally takes several weeks for the new mortgage to be registered etc at the Land Registry and this process will delay the legal work on the sale. So if you are selling immediately you come out of the penalty period, please don't remortgage just for the sake of it.

purplebiro

Thanks All,

I have spoken to Mortgage Express who have clarified that when my fixed rate period ends I will not face any early redemption fees (there is an admin charge of £115.00). PHEW!

My broker (Russell at London and Country who I highly recommend) has told me that it is very unlikely that I will find any mortgages with a decent rate with no early redemption fees if I remortgage, in fact the £2k that Nationwide offer is pretty reasonable.

So now I am faced with a choice - either stick with Mortgage Express and pay approx £100 more a month than I am at the moment untill I sell and then no redemption fees or go to Nationwise and pay about what I'm paying at the moment but have to shell out when the house sells. Seems like a no-brainer, right? Am I missing something?

Incidentally I am aiming for a quick sale, no more than six months (tempting fate writing that down, eh?)

neas

Id remortgage for a fixed... so you dont have an early repayment charge though.

Your assuming you can sell your house in what timescale? Some people have their houses on market for 6 months... unwilling to reduce the price... so waste their time. If you want to sell quick.. its now turned to a buyers market... you will have to price smartly (as rightmove suggests in their current newsletter) i.e lower your price below market... as to get some FTB buying your property.

House selling can take a long time.... and it sounds you want a quick sale to avoid paying too much on the mortgage etc.

purplebiro

I certainly do want a quick sale and I'm keeping a keen eye on the local market, so I should be able to price appropriately. There is a big price gap though - identical houses priced with a gap of £10k where one is clearly after a quick sale and the other doesn't mind holding out for a keen buyer. If I go at the bottom end of this scale I've effectively made no profit on my purchase two years ago, so it's nail biting times round my way