Current deal ending and struggling to get reasonable new deal.

JMcC

I am amazed that it is so difficult to find a new mortgage deal. Situation below, I wonder if anyone has any suggestions.

Current deal is with RBOS with discount rate of 5.59%. Will owe around £28000 on July 1st and this is the date my current deal ends. At this point I move to the banks standard variable rate, which I believe is about 7.19%.

I have no credit problems and a good history. I bank with Royal Bank, with current account and cash ISA. I intend to pay this mortgage off over 2 years to be mortgage free.

The bank are telling me the very best they will offer is 0.25% off their variable rate, unless I pay a fee (up to £999) to get good rate. Obviously a fee would be wasted given the short term and relatively low amount. I have asked them to investigate whether they can do anything else for me.

If RBOS cannot provide a reasonable deal, then I intend to move all my accounts.

I have had one offer from HSBC of 5.99%. They will pay £400 to cover legal fees, but not sure if that will actually cover.

Tempted to stay with bank and pay off as quickly as possible (I could get some cash together and pay some off right away and try to pay balance in 1 year).

Any suggestions ?

luckyfool

You are not going to get access to all the best deals as many will have minimum loan amounts of £50k or even £100k. So that is the first thing. In your circumstances when you took your last mortgage out it might have been an idea to take a long term fixed rate that would run you to the end of the mortgage term, either that or a good value term tracker.

Other factors working against getting your ideal deal include the fact that many lenders have a minimum term of 5 years (though you could overpay), and also the costs in moving may outweigh the benefits at that kind of loan size.

You could take a flexible one account type mortgage on Interest Only or Repayment over 5 years and just overpay/leave money in the offset account until you have enough there to pay it off in full? Other than that you may just be best to get the 0.25% discount from RBS and pay it off as quickly as possible.

wymondham

as above, I'd look at One Account due to small amount of mortgage and the ability to pay off in 2 years.... lots of threads on this, have a look...

Conrad

Be sure to take into account the cost of interim interest on both the new and existing mortgage.
I doubt I would change lender in view of the low loan size.

JMcC

Thanks very much. Very good advice.

I hadn't thought of taking out a current account type mortgage, assuming it might not be suitable for such a sort term. Will ask the bank about that though.

Thanks again.

babydaisy

I've just gone with the Woolwich - base rate tracker plus .74% currently 5.74% and you can make overpayments, no early redemption penalties etc

Best thing is that it is free completely to switch - no valuation fee, no product fee, no legal fees - I've just done it all over the phone in half an hour and they are sending me some forms out to sign and return with proof of ID and that's it done

BD xx

_Andy_

babydaisy wrote: »

I've just gone with the Woolwich - base rate tracker plus .74% currently 5.74% and you can make overpayments, no early redemption penalties etc

Best thing is that it is free completely to switch - no valuation fee, no product fee, no legal fees - I've just done it all over the phone in half an hour and they are sending me some forms out to sign and return with proof of ID and that's it done

BD xx

Minimum loan size is £50,000 so unfortunately wouldn't be possible for the OP.

wymondham

_Andy_ wrote: »

Minimum loan size is £50,000 so unfortunately wouldn't be possible for the OP.

I think the One Account is similar - maybe £30k?? - not a problem, just massively overpay on day 2 of the mortgage with the surplus....

minimike2

Current account mortgage probably the best way to go if you can (the one account is still RBOS mind ).

If you dont end up going that way then the only reason to move all your banking would be if you went down the offset route...dont do it just because you are upset at them not being able to give you cheap money.....its a big hassle moving bank accounts and its just the way the market is at the moment...no one is willing to lend cheaply.

JMcC

Just spoken to the 'One Account' people.

Bad news for me I'm afraid. Despite already having a mortgage with the Royal Bank, the set up fee's for this mortgage make it not suitable.

The minimum borrowing is £30K, which is fine, I could simply take that facility and not use ito the the maximum. Unfortunately though I would be charged £360 in legal fees. I would also require to pay a valuation fee of £200.

I'm very surprised it is so much, since my mortgage is already with the Royal Bank. However looks like I am beat on that one.

Right now, the best bet seems to be to take the 0.25% discount on standard variable rate and pay off as quickly as possible........