Higher lending Charge

marc1977_2

Hi, I have a major dilemma in that I have a fixed rate that ends now and ported this to another property late last year. Took out a tracker to increase the mortgage to buy my new property but was stung with a higher lending charge of over 3k. This has been added to my outstanding. I have been approved for a very good fixed rate by another lender, they want to put a higher lending charge of 3k on as well! This means that over a period of 6 months, over 6k of HLC's are due to be put on my mortgage. These policies are to protect the lender and I fully accept that but my existing lender will not cancel despite only being in existence for 6 months (the policy is for 25 years!)
I am faced with having to stick with my existing lender with an increase of over £150.00 per month as the equity of my property is beeing eaten up by HLC'S. Hey Martin, I need your advice!!!!

homer_j_3

The HLC is not negotiable nor refundable.

I would look at another fixed rate without the HLC on.

marc1977_2

Thanks for your advice, my current lender and new lender have been very cagey about this. It seems that I shall have to stick with my existing lender as I want to sell my property within three to four years. I do not want to have this large amount of 'fresh air' eating into my equity. This is a potential danger zone for remortgagers!! The current lenders £3k I shall have to absorb but the new lender's HLC will have to stay with them. This is a potential for a borrower to be in negative equity without realising.

homer_j_3

Its something that I always try and avoid (HLC) where possible because it gives you no benefit and on short term deals, you very rarely repay the HLC so you may have been better off on an interest only, higher rate with no HLC.

What is the ERC?

marc1977_2

The ERC is nothing for existing, new with current lender is 3% y1 2% y2 3% y3

homer_j_3

So current mortgage is built up of 2 products - A fixed and a tracker, with the tracker being the bit you topped up with and had the HLC of 3 applied to.

You have been approved by a 2nd lender but they also have a HLC?

Are you tied in with the current set up or have I got confused somewhere. If you have, then the new deal has to make benefit on moving somewhere else, if it does not then you stick where you are.

If you do not tied in currently, then get someone like a broker to source you a non HLC based deal?

I am sorry but I re read your post and I have confused myself lol

marc1977_2

I think I am confusing you!! You are correct with your assumption in that I have no ERC with the current lender. However, the new lender wants to charge an additional HLC of 3k which takes my total borrowings to £199950. I am on a 95 % mortgage so this new total takes it to nearly a 100% mortgage. (bought property for £189950)
Does this make sense?!!:o

homer_j_3

you need to completely forget this new deal and find one without a hlc charge
how many years is the new deal for (the preferential rate period that is)

marc1977_2

2 years @ 5.09% which reduces my monthly payments by 10.00 per month which I was more than happy with. I agree with you and thank you very much for your advice, this has been playing on my mind considerably because on the face of it it the new deal is attractive but the repocussions a few years down the line are not good. My current lender will just switch my existing to a three ear fixed rate for all of my borrowing at 5.79 without the surveys etc and in view of the HLC I think this is what it will have to be with an increase of 100 per month. My current lender put the HLC on late last year and in essence they have tied me to them!

homer_j_3

If the HLC product is a 2 year product then you need to split the cost of the HLC over this period.

So if your HLC is 3k and benefit period is 2 year then that equates to £125 a month.

If you add this onto the monthly repayment then that is the true cost of that product when comparing with a no HLC product

marc1977_2

In my confused state, that is what I did do. Therefore, my increase of £100.00 per month with my existing lender (whilst retaining some equity due to another HLCnot being added on) is correct - is that right?

You don't know how grateful I am for your advice!!!!