Remortgage: has my lender made a good offer?

[V1nce Fox]

Lender is Skipton, remortgage is for just over 70k, LTV is about 28%. Fixed 5 year term at 2.69% due to end imminently.

Just logged in to my portal for them and gone through a quick online mortgage revision/updater with Skipton, offering to just transfer the rate so no fees, etc.

They've offered me a renewal on 5 year fixed again at 1.95% which I can click to approve now. I've scooted over to MSE mortgage Best Buy page and next comparable competitive one there is Coventry at 1.85% but with fees negating the difference.

I'm a bit of a duffer at this so my question is: does this seem like a good deal or am I missing something fundamental? It appears as though I can literally click to agree the revised rate right now.



Any advice/thoughts/predictions gratefully received...

[Malcolm E Boo]

Just redone my fixed term with Nationwide.
1.84% fixed for five years with no fees.

[V1nce Fox]

Malcolm E Boo said:

Just redone my fixed term with Nationwide.
1.84% fixed for five years with no fees.

So I'm in the right ball park then?

I'm just not used to doing this stuff so want to make sure this is standard practice and that I'm not getting blind sided.

[Alex Z]

With just £70k left the fraction of a percent difference is pretty much irrelevant.
I’d take the straightforward easy remortgage.

[V1nce Fox]

Alex Z said:

With just £70k left the fraction of a percent difference is pretty much irrelevant.
I’d take the straightforward easy remortgage.

i did some quick maths but i'm a bit number blind. 1% difference on 70k is 700 quid, so does that mean I'm looking at a total difference of 700 between a 1% or 2% rate over the life of the mortgage, or am I missing something here?

again, i'm very poor with numbers/maths!

[cossy400]

Sarnie

[bogie]

Easy to work out, plenty of calculators online, just punch in the numbers and compare

https://www.moneysavingexpert.com/mortgages/mortga...

[thebraketester]

1.74% 3 yr fixed with Santander on ~130k balance.

Seems cheap at the moment.

Edited by thebraketester on Friday 11th October 22:19

[CoolHands]

Alex Z said:

With just £70k left the fraction of a percent difference is pretty much irrelevant.
I’d take the straightforward easy remortgage.

That. £2-£3 quid a month difference. The ball ache you hear some people go through I’d just take the easy option.

[I 8 a 4RE]

On a £70,000 balance, every 1% difference in interest rate equates to £700 / annum = £58 per month.

Every 0.1% difference therefore means £70 / annum = £5.83 per month.

Your rate sounds industry competitive (the 5 year fixer will drive it up a little bit, do not get fooled by friends who say they have 1.2% as they will probably have it on a very short term).

The paperwork involved with switching providers CAN BE a pain in the backside.
I would stick with your current provider, but a cheeky call into your bank could get you an even better deal.

To put a nail in this coffin; the savings on interest will also get less as you pay off principal.

[gangzoom]

thebraketester said:

1.74% 3 yr fixed with Santander on ~130k balance.

Seems cheap at the moment.

Edited by thebraketester on Friday 11th October 22:19

Nuts isn't it, a decade a ago when I first got a mortgage 6% was considered a good deal.

Now its below inflation, really is almost free money.

[V1nce Fox]

I 8 a 4RE said:

On a £70,000 balance, every 1% difference in interest rate equates to £700 / annum = £58 per month.

Every 0.1% difference therefore means £70 / annum = £5.83 per month.

Your rate sounds industry competitive (the 5 year fixer will drive it up a little bit, do not get fooled by friends who say they have 1.2% as they will probably have it on a very short term).

The paperwork involved with switching providers CAN BE a pain in the backside.
I would stick with your current provider, but a cheeky call into your bank could get you an even better deal.

To put a nail in this coffin; the savings on interest will also get less as you pay off principal.

Thanks for this, I'm bloody awful at working out this stuff. I had it figured that I was only going to pay 700 quid more in total. And they let me drive.


So it's sounding like the age old bet of "will it drop" after Brexit. If I have this right, I'll be unlikely to see a drop of over 1% even if it does though, which would be an extra 50 odd quid a month? Be nice to have it, but is it worth the risk?

I know I'm going to regret asking this but is it looking like there are any strong predictions on mortgage rates for the next couple of months?

[silobass]

I don't have much knowledge in this sort of thing but I do know that the Bank of England base rate is currently 0.75% so it's unlikely to drop at all, certainly it won't drop 1%.

[thepeoplespal]

For a 5 year fix I'd also be comparing the penalties for redemption rather than pure % terms and the typical APR% over your offer rate after the fix finishes in case you can't remortgage on affordability grounds and roll into a very costly rate compared to others.

[as the pain of not having to fill more forms out (if that is indeed the case) and provide proof of everything up to and including your onside leg measurements, would normally make it an easy option for me to stay with same provider]

Says me a few years in on a Bank account 10 year fix mortgage at nearly twice your rate with fairly sizeable redemption penalties. That is what we were comfortable with, we still aren't planning on moving and the bank account aspect for saving is an important part for us.

[V1nce Fox]

A minor update...

I've decided to go with this deal and went onto the Skipton live chat to confirm something which is important to me: the ability to overpay by as much as possible.

Long story short, I originally had a 115k mortgage deal 5 years ago which I now want a 70k renewal on. I like to overpay. A LOT.

When I spoke to someone on the phone a month or two back at Skipton, he checked with the underwriters and informed me the new deal (70k) would respect the original loaned amount at a 10% cap, so up to 11.5k overpayment allowance in any year.

After talking in the online chat window today I was told the overpayment allowance would be the new amount, so 7k. My plans for paying of the house rely on me being able to overpay at the very least 8k per year.

I've asked the chat window person to go and double check with the underwriters and put the physical amount in writing to me that I can pay 10% against, as the deal I've got in principle from them is worded very ambiguously on this matter. I've stressed that this is the only barrier to me signing the new deal.

I guess if I can't get 10% on the original amount, I'd need to offset into savings which is (a) a faff and (2) not so easy to get 1.95% on these days.

ETA the ambiguous bit reads: "Overpayments of up to 10% of the original loan amount can be made to repay part of your mortgage..."

Edited by V1nce Fox on Saturday 12th October 10:37

Edited by V1nce Fox on Saturday 12th October 10:42

[Condi]

V1nce Fox said:

ETA the ambiguous bit reads: "Overpayments of up to 10% of the original loan amount can be made to repay part of your mortgage..."

Its not that ambiguous, but what you're forgetting is that you are discarding the old mortgage completely and starting a new one.

So it says if you take out a new £70k mortgage today, you can overpay £7k (10% of the initial amount) per year for the term. Otherwise if you paid off £7k plus your normal payments (say, £6k) in your first year, your outstanding amount would be £57k, and 10% overpayment of the remaining £57k is obviously lower than 10% overpayment of the original £70k.

Your old mortgage, and any T+C's attached to it are dead and gone. You are simply paying off the amount outstanding previously and borrowing a new £70k.


EDIT - if you wanted to maximise overpayments without being too worried about the IR, you could ask about a variable rate mortgage, as they are usually more flexible on overpayments

Edited by Condi on Saturday 12th October 16:26

[V1nce Fox]

Condi said:

V1nce Fox said:

ETA the ambiguous bit reads: "Overpayments of up to 10% of the original loan amount can be made to repay part of your mortgage..."

Its not that ambiguous, but what you're forgetting is that you are discarding the old mortgage completely and starting a new one.

So it says if you take out a new £70k mortgage today, you can overpay £7k (10% of the initial amount) per year for the term. Otherwise if you paid off £7k plus your normal payments (say, £6k) in your first year, your outstanding amount would be £57k, and 10% overpayment of the remaining £57k is obviously lower than 10% overpayment of the original £70k.

Your old mortgage, and any T+C's attached to it are dead and gone. You are simply paying off the amount outstanding previously and borrowing a new £70k.


EDIT - if you wanted to maximise overpayments without being too worried about the IR, you could ask about a variable rate mortgage, as they are usually more flexible on overpayments

Edited by Condi on Saturday 12th October 16:26

I agree it can be interpreted this way and in all probability will be. My reason for querying it before signing on the dotted line is the conversation I had with a representative of the company prior, in which I was told the original would be honoured.

As I said, I'll probably end up going with them anyway but if I can lock in with a higher agreement on overpaying, I'll certainly be happier about it.

[Condi]

V1nce Fox said:

I agree it can be interpreted this way and in all probability will be. My reason for querying it before signing on the dotted line is the conversation I had with a representative of the company prior, in which I was told the original would be honoured.

As I said, I'll probably end up going with them anyway but if I can lock in with a higher agreement on overpaying, I'll certainly be happier about it.

Yes, but it seems like there was a misunderstanding around the word 'original' - you were thinking the original mortgage you currently have with them, the agent was referring to the conditions of the mortgage, whereby original means the initial loan amount of that product.

Go variable rate and you should be able to overpay more if that is important to you. Or put the over payment cash aside and take out a smaller mortgage next time - any returns on stocks and shares over the mortgage term should be higher than the mortgage rate, so you will likely end up better off that way.

[Stella Tortoise]

V1nce Fox said:

I agree it can be interpreted this way and in all probability will be. My reason for querying it before signing on the dotted line is the conversation I had with a representative of the company prior, in which I was told the original would be honoured.

As I said, I'll probably end up going with them anyway but if I can lock in with a higher agreement on overpaying, I'll certainly be happier about it.

Ask them if your account number will change.

[KTF]

V1nce Fox said:

A LOT.

You could always pull the term in to match your desired monthly amount including overpayment.