So confused with remortgage options

lhoney · 7 August 2018 at 12:52PM

Before I begin, I just want to say I've read through several guides for help on this, but it seems that there are lots of options suggested and I'm getting a bit confused about which the best is. I was hopeful that someone here might be able to help before I go into my bank (I'm not always sure how helpful they are when they're trying to get the best deal for themselves).

I don't mind giving all the numbers below since it'll probably make things easier:

My partner and I bought our house in July 2014. It cost £115,000 and we paid a 10% deposit, so we were left with £103,500 to pay. We were on a fixed rate mortgage until July 2017 and have been on a variable rate ever since. There's now £95,000 left to pay, with 26 years left on the term. Our monthly repayments are £490 (probably going up to £505) with the new rate change). In case it makes any difference (though I don't think it does?), three houses identical to ours have sold in our street this year for £150-160k (I would guess ours might be actually valued a little higher going by the photos we saw online of theirs, since ours had a new kitchen, bathroom and boiler put in just before we bought it and is more presentable at the front).

Our current monthly payment is easily affordable for us and we manage to put away a good amount into savings each month too. My partner has just received a promotion and will be earning a few hundred extra per month from September, so we feel comfortable that we could afford to pay a higher amount each month. My question is: would it be possible to get a mortgage deal on a fixed rate, while both reducing the term and putting in a lump sum? We don't want to put all our savings into paying off the mortgage because we'd like enough there for emergencies, but we could comfortably free up at least £5000, possibly up to £7000 if it's worth it. I just don't know what the best option is, whether we should even reduce the term at all, not put any lump sum in, or what.

Thanks to anyone reading and who might be able to offer some advice.

foxy-stoat · 7 August 2018 at 1:05PM

If your on the standard variable rate I would just call up your lender and see if there are any fixed rate deals they can put you on, also ask them what they think the value is as they will have it indexed linked anyway.

I would leave the term where it is and over pay each month with what you can afford - that way if anything changes you wont have to struggle to keep up the higher payments.

butterflybook · 7 August 2018 at 1:40PM

see a broker - They will look at your circumstances and look at remortgage options with a wide range of lenders, They will look at your budget and will ideally reduce the term paying less interest overall and also taking in to account the lump sum you wish to repay. A broker will be best placed to look at all of the options rather than just going to the bank your current deal is with who can only offer a new fixed rate product of their own choosing

lhoney · 7 August 2018 at 2:23PM

foxy-stoat wrote: »

If your on the standard variable rate I would just call up your lender and see if there are any fixed rate deals they can put you on, also ask them what they think the value is as they will have it indexed linked anyway.

I would leave the term where it is and over pay each month with what you can afford - that way if anything changes you wont have to struggle to keep up the higher payments.

Thanks. I seem to have misunderstood overpayments. I've just been reading about them and I still don't quite get how it works. I saw that you can usually overpay up to 10% per year, but is that 10% of the total amount owed or of the agreed monthly payment? E.g. if my fixed rate deal is £450 per month and we owe a total of £95k, would I only be allowed to overpay up to £45 per month, or does it work out at £9.5k per year? Sorry if these questions sound dumb. I've been doing some overpayment calculators and it seems that if we overpay by only £200 a month (which is probably the least we could afford) we could cut 10-12 years off the term. I think that sounds like a sensible way to go if so.

sparkey1 · 7 August 2018 at 2:28PM

Can you confirm who you are with at the moment. As the answers may be different.

For example, with Virgin Money you can repay 10% based on the balance on 1st Jan just gone.

Whereas the Leeds, their overpayment date is calculated on the mortgage anniversary.

Different banks have different ways of dealing with overpayments as well.

lhoney · 7 August 2018 at 2:30PM

It's with Lloyds. I was hoping to stay for sake of ease since I have other accounts and savings with them and there's a branch close to home, but willing to consider elsewhere if there are significant savings to be made.

Edit: I've just read the terms on their website that explains the 10% thing. It's also about the 1st Jan balance. I wish I'd known this a few years ago, we've been putting money into savings accounts when we could have been overpaying the whole time

At least now we know. It looks like I can get a 5 year fixed rate for about £75 less per month than we pay now, so that's some extra to overpay with I guess.

sparkey1 · 7 August 2018 at 5:34PM

I've never had a morgage with Lloyds so my suggestions are based on experiences of other lenders.

Have you looked at their renortgages for existing customers page. Its at https://www.lloydsbank.com/mortgages/existing-customers.asp

Now you know he 10% rule for LLoyds ring them up and get their details for overpayment. They might be able to

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So confused with remortgage options

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