Mortgage Renewal and Moving and product fees
Discussion
I think I know the answer to this but I'd be keen to hear the opinions of others.
Our mortgage is due for renewal next April. The outstanding loan is about 178k which represents just over 40% LTV.
My criteria for the new mortgage were flexibility and no early repayment fees (I am in quite a fortunate position whereby I can overpay up to 3k a month if I so wish - for the last year, that money has gone into savings as my current mortgage is fixed a 1.5%).
The reason for the "flexibility" is that we are planning to move next year (we've outgrown the house and I am fed up of working on my cars outside in the cold!).
Here's my conundrum...
My broker has found a variable rate mortgage (+0.25% vs base rate) which offers the flexibility and no fees but it costs £1k in product fees. I will pay this off immediately so as to attract no interest on it.
The follow on rate for my current mortgage is 7.5%.
Our house will likely go on the market in Feb/March. If it sells immediately and we move within 3 months, the variable rate mortgage will have cost me about £600 (Product fee - interest saved at 5.5 vs 7.5%). If it takes longer to sell, the interest saved > product fee. So essentially, it is a gamble.
What would others do in this situation?
Our mortgage is due for renewal next April. The outstanding loan is about 178k which represents just over 40% LTV.
My criteria for the new mortgage were flexibility and no early repayment fees (I am in quite a fortunate position whereby I can overpay up to 3k a month if I so wish - for the last year, that money has gone into savings as my current mortgage is fixed a 1.5%).
The reason for the "flexibility" is that we are planning to move next year (we've outgrown the house and I am fed up of working on my cars outside in the cold!).
Here's my conundrum...
My broker has found a variable rate mortgage (+0.25% vs base rate) which offers the flexibility and no fees but it costs £1k in product fees. I will pay this off immediately so as to attract no interest on it.
The follow on rate for my current mortgage is 7.5%.
Our house will likely go on the market in Feb/March. If it sells immediately and we move within 3 months, the variable rate mortgage will have cost me about £600 (Product fee - interest saved at 5.5 vs 7.5%). If it takes longer to sell, the interest saved > product fee. So essentially, it is a gamble.
What would others do in this situation?
LennyM1984 said:
I think I know the answer to this but I'd be keen to hear the opinions of others.
Our mortgage is due for renewal next April. The outstanding loan is about 178k which represents just over 40% LTV.
My criteria for the new mortgage were flexibility and no early repayment fees (I am in quite a fortunate position whereby I can overpay up to 3k a month if I so wish - for the last year, that money has gone into savings as my current mortgage is fixed a 1.5%).
The reason for the "flexibility" is that we are planning to move next year (we've outgrown the house and I am fed up of working on my cars outside in the cold!).
Here's my conundrum...
My broker has found a variable rate mortgage (+0.25% vs base rate) which offers the flexibility and no fees but it costs £1k in product fees. I will pay this off immediately so as to attract no interest on it.
The follow on rate for my current mortgage is 7.5%.
Our house will likely go on the market in Feb/March. If it sells immediately and we move within 3 months, the variable rate mortgage will have cost me about £600 (Product fee - interest saved at 5.5 vs 7.5%). If it takes longer to sell, the interest saved > product fee. So essentially, it is a gamble.
What would others do in this situation?
You would be very fortunate to sell and complete in around 3 months in the current market. Most of the houses that I have seen that have sold recently are taking 6 -9 months to complete at least, and a lot of them come back on the market after several months. Our mortgage is due for renewal next April. The outstanding loan is about 178k which represents just over 40% LTV.
My criteria for the new mortgage were flexibility and no early repayment fees (I am in quite a fortunate position whereby I can overpay up to 3k a month if I so wish - for the last year, that money has gone into savings as my current mortgage is fixed a 1.5%).
The reason for the "flexibility" is that we are planning to move next year (we've outgrown the house and I am fed up of working on my cars outside in the cold!).
Here's my conundrum...
My broker has found a variable rate mortgage (+0.25% vs base rate) which offers the flexibility and no fees but it costs £1k in product fees. I will pay this off immediately so as to attract no interest on it.
The follow on rate for my current mortgage is 7.5%.
Our house will likely go on the market in Feb/March. If it sells immediately and we move within 3 months, the variable rate mortgage will have cost me about £600 (Product fee - interest saved at 5.5 vs 7.5%). If it takes longer to sell, the interest saved > product fee. So essentially, it is a gamble.
What would others do in this situation?
I would pitch your calculations with a more realistic timescale.
Edited by anonymous-user on Friday 8th December 09:57
Bluequay said:
You would be very fortunate to sell and complete in around 3 months in the current market. Most of the houses that I have seen that have sold recently are taking 6 -9 months to complete at least, and a lot of them come back on the market after several months.
I would pitch your calculations with a more realistic timescale.
Thanks! That was kind of what I wanted to hear and a longer time frame would suit us fine... well apart from the lack of garageI would pitch your calculations with a more realistic timescale.
Edited by Bluequay on Friday 8th December 09:57
LennyM1984 said:
Bluequay said:
You would be very fortunate to sell and complete in around 3 months in the current market. Most of the houses that I have seen that have sold recently are taking 6 -9 months to complete at least, and a lot of them come back on the market after several months.
I would pitch your calculations with a more realistic timescale.
Thanks! That was kind of what I wanted to hear and a longer time frame would suit us fine... well apart from the lack of garageI would pitch your calculations with a more realistic timescale.
Edited by anonymous-user on Friday 8th December 09:57
Edited by anonymous-user on Friday 8th December 10:13
We monitor the average completion times across the mortgages we provide.
FTB applications are currently at circa 3.5 months from application to completion, reflecting the usual lack of a chain.
NTB applications are just over 5.5 months from application to completion, reflecting the complications of a chain. We are currently completing lots of applications that started in the summer........
FTB applications are currently at circa 3.5 months from application to completion, reflecting the usual lack of a chain.
NTB applications are just over 5.5 months from application to completion, reflecting the complications of a chain. We are currently completing lots of applications that started in the summer........
Sarnie said:
We monitor the average completion times across the mortgages we provide.
FTB applications are currently at circa 3.5 months from application to completion, reflecting the usual lack of a chain.
NTB applications are just over 5.5 months from application to completion, reflecting the complications of a chain. We are currently completing lots of applications that started in the summer........
That's good to hear, is it an improvement over the last few months?FTB applications are currently at circa 3.5 months from application to completion, reflecting the usual lack of a chain.
NTB applications are just over 5.5 months from application to completion, reflecting the complications of a chain. We are currently completing lots of applications that started in the summer........
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