More ReMortgage Advice

bluebearboy

Hi, a familiar post but specific to my circumstances. Any advice will be greatfully recieved- thanks.

Our fixed rate mortgage (4.69) is up at the end of June 08. We have a £131500 mortgage of which currently we pay £84500 repayment and £47000 interest only which has 21 years left to run (also there is an endownment which covers the £47k which has been running for 6 years and is on track. £92 per month). We started with about 65k equity in the house (4 years ago) and its worth (at the moment) is about 230k. At the moment we have no plans to move

My wife and I both work- her part-time as we have an 18 month old child, she will probably go back to work in about 3 years assuming we don't have another one - which at the moment isn't on the cards. Our joint income is £48k, we have a good credit rating and our only other debt is £2800 on a credit card which we pay off £100 per month (sometimes more)

I've been looking round for ages and am very concerned the rates are just getting higher and higher. We are due to meet with an HSBC advisor tomorrow, he initially offered a 5.39 3 year fixed (we spoke about 3 weeks ago) but speaking to him today he mentioned the rates had gone up and we will have to discuss the new ones. He also mentioned that we could still do the rate matcher which, last time I looked would cost £1699.

Another option would be to take a fixed rate offered on 'interest only' and look for the lowest redemtion fee until hopefully things settle down.

My questions are:
1. Are there hidden extras with the HSBC rate matcher
2. Is it worth taking the interest only option
3. Am I better off just bitting the bullet and taking one of the rates offered before they hit 7%
4. Are there any signals that another one of the big boys (just missed out on the Woolwich one at the end of April) are going to offer a good product over the next month or so and it may be worth just paying the 'non-fixed' rate with my current lender (first active) (will be about 6.7% for a month or so and waiting)
5. Is it worth getting in touch with first active to see if they will offer anything (I didn't bother after looking at their current rates.)

Many thanks in advance for any advice.

rdsmortgageman

You have a couple of options:

1/ Take a new rate with another lender. There are likely to be arrangement fees (probably added to the loan) and possible legal & val fees (although a lot of lenders cover these).

2/ Take another rate with First Active. You will save any hassle and legal & val fees, but will likely have to pay arrangement fee.

3/ Stay on SVR with First Active.

I would suggest speaking to a Whole of Market Broker, find out what the best deal available for your circumstances is. Once you have the interest rate, compare against staying on SVR with First Active (remember to factor in all moving fees).

Remember that you are likely to pay (or add) a high arrangement fee for moving to a lender with a cheaper rate. On a monthly basis, this will be cheaper than staying on SVR, but would not be best advice for the long term.

If you can afford the monthly payments on the SVR, this will probably be the best option in the short term to see what happens with the market.

homer_j_3

Here is how I see it.

The HSBC fee of £1699 will be placed on a 2 year product so that equates to a fee of £850 a year or £70.83 per month. This does not incluse any other exit fees or admin fees that may be included that you have not disclosed.

If there are any more fees which would be charged for leaving current lender rather than staying with them, then you need to add this on to the above amount and work out what it means monthly to you. The reason for this is that is how much money your new payment has to be better by to make it worthwhile moving to the HSBC.

I read on here a while ago that you have to pay the £1699 fee upfront and its not refundable. I am not sure how this is payable, when it is payable and under what conditions it will be returned, if any. You need to get this information as you need to know if you could lose this money should the app be unsuccessful for any reason.

You also have to ask the question. Would staying with HSBC be just like having the hair of the dog to get rid of the hangover. You are going to have to come off the low rate at sometime and if rates are even higher in 2 years time, the hangover may be a lot worse than it is now.

I would suggest that you look at your lifestyle and look to try and make adjustments that allow you to maintain your current repayment methods and term as a minimum. Going interest only should be a last resort in your position as you are only setting yourself up for bigger problems potentially later down the line.

I would seek some advice if I was you. Get the info from HSBC and an illustration. Do not get credit checked and go and see a broker to see if they can beat it and ensure the advice is correct for you.