Top Mortgage Loophole

alyssa_mae

So if we borrowed £143k and paid back the £58k diffrence the next day. we would keep the £10k cashback. would the monthly morgage repayments be set at £143k or would they go down to £85k we would then owe???

catsonic

im so confused its unbelievable!! lol

i've got a £19,000 morgage and the houses are going for about £90,000 on our street.

im with nationwide with an interest rate of 5.89.

would it be worth changing to this one and getting an extra 10,000 on the morgage?

how much would i get back?

Rex_Mundi

I'm not sure if I've worked this out correctly.

If we applied for £120,000 mortgage. We would receive £128,400.

Out of this, we pay off £10,000 to the Nationwide which clears our present mortgage.

Then pay Loughborough £118.400 which leaves us an outstanding mortgage of £1,600 which we pay off slowly, and can clear with no penalty in 3 years time.

Are these figures OK, or have I missed something?

catsonic

think i should stay on the vouchers board!! at least i can get my head around that one!!! lol

alyssa_mae

eeds Sealing Fee - A charge of £90.00 will be made on redemption of your mortgage unless redemption is due to the death of a borrower or a replacement loan is taken out with the Society
Deeds Production Fee - A charge of £50.00 will be made for the production of your deeds.
Additional Fees - Additional administration fees may be apply during the life of your mortgage. Details of these can be found in the Sundry Charges leaflet.

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is this what we have to pay if we move our morgage ?

stevem01

Catsonic - to use your figures as an example

If the amount owing on your Nationwide mortgage is £19,000 and the annual interest rate is 5.89%, then you'll pay £1119.10 interest to the Nationwide in the next year (19000 x 0.0589 = 1119.10)

If you switched your mortage to this deal with the Loughborough B.S. and managed to increase the mortgage on your property to say £80,000, then your cashback payment from Loughborough B.S. would be £5,600 (80000 x 0.07 = 5600). In theory you could pay off your existing mortgage debt of £19,000 and be left sitting with £61,000 from the mortgage with the Loughborough B.S. PLUS the £5,600 cashback payment, leaving you with a total of £66,600 (61000 + 5600 = 66600).

If you used all this £66,600 to reduce your mortgage debt with the Loughborough B.S. then you would be left with £13,400 outstanding on your mortgage with the Loughborough B.S. (80000 - 66600 = 13400).

If the amount owing on your Loughborough B.S. mortgage was £13,400 and the annual interest rate was 6.1%, then you'll pay £817.40 interest in one year (13400 x 0.061 = 817.40). This is a reduction of your interest payment of £301.70 per year or in other words around £25 PER MONTH REDUCTION in your mortgage interest payment compared with what you are paying to the Nationwide AND you would only owe Loughborouh B.S. £13,400 rather than the £19,000 you currently owe to Nationwide.

I'm sure there would be some payments to make to settle the Nationwide mortgage and take out the Loughborough B.S. mortgage (e.g. valuation/survey charges, legal charges etc. etc.) but I would have thought you might get these for £1000 or maybe even less.

Sounds to me like you can't really lose - unless Loughborough B.S. won't let you borrow as big an amount as £80,000.

For example if you could only borrow £30,000 then it might not be worth all that much eventually. In these circumstances your cashback amount would be £2100 but the legal & mortgage charges would probably swallow up a fair chunk of this and you'd be paying a slightly higher interest payment on your new mortgage.

Steve

peoplesrepublican

Can someone help me with these figures please? I cannot find this elusive 3.77% rate. Our figures are:

£54K owing on current mortgage
house worth around £110,000, therefore max borrowing (90%) = 99000
Cashback on this = £6930

No matter what I do with these figures, I cannot get this 3.77% !! I am currently trying to find the best deal to remortgage (current deal ends 31/10), and this sounds like a good buy, if only I could make it add up!

If anyone can help, it would be much appreciated.

Cheers

gkf

Do they ask what you are using the extra cash for? I have asked for a callback tomorrow on this.

noyman

So


If i borrow the max for the 7% cashback (142,000K ish), then pay back the excess this would leave me with my 62K mortgage @ 6.1% which is £454 per month. See this for the calc

http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

Then put the 10K in a high interest account with direct debit (say 5% pa payed monthly), would agument this with a supplement say £160-170 per month, then if I've done my calcs right this would nearly result in me having nothing left after 36 months. One major saving!!!

hhhmm would the cashback be taxable income????? if so that could throw a spanner in the works.

Great spot Martin

reddevilled

What are the costs of remortgaging - ie valuation fees etc? Surely that makes a difference.