Remortgaging

[rcx132]

Hi, my initial 5 year lock in period is coming to an end and I just got a letter saying that the mortgage will now switch to a crummy fall-back rate.

Had a look online for alternatives and it looks a bit like savings accounts and energy packages, you get a good deal for a short period and then it switches to a bad deal, forcing you to move supplier every year or two.

Only with mortgages it seems even more difficult because there's "product" fees to pay when you switch making it even more difficult to compare and you now have to consider how long it takes you to break even on the product fee.

Is it really this bad or is there an easier way?

 

[frank horton]

Bit like selling ur soul to the devil.....eh......sorry can't offer advice as been outta that trap a while....
There's a good money bloke on ITV, I’m sure he'll have a web page there....Don't know his name as don’t watch Brit tv much....
I just worked two jobs to pay mine off....all of the lenders are just loan sharks,
Just in a nice suit and without a baseball bat.....
Good luck....frank

 

[Robotstar5]

Money saving expert - link to MSE

 

[123hotchef]

we just re morgaged and you have to do the math and work it out we would have been better off with a 2 year deal if you take into account the arrangement fees and solictor fees but we chose a 5 year deal because the mrs job is up in the air and who knows what she will be doing in 2 years time when it would be up to re morgage again. You could always try a broker that dont charge you and can sometimes get better rates and deals for you too we used a broker but checked the other deals out too just so we knew we got the best option for us

 

[armalites]

I've just been through similar

I had previously signed up to a 10 year fixed as at the time it looked like everything was going pear shaped. In the end it didn't but I least I knew exactly what I was paying for those 10 years. I'm in the last 5 years now and as I'm over the hump I could have just rode it out but I signed up for a 5 year fixed at 2.19%. I stayed with my lender as it meant no messing around with surveys etc. Interesting thing is there were two lower 5yr rates available but when I did a comparison the total to pay was more yet there were no extra fees so it is a bit of a minefield.

My mortgage is with Barclays and I had absolutely no issues switching to a different fixed rate at the end of the previous one, it was a simple online selection and I retained the same features.

 

[angellonewolf]

money saving expert search on there done this over a year and a bit ago

when i donr it before canvindish on line where very good but you paid for there advice at teh time was £85 there might not be a charge now or might be more but found me a very good morgage

this time i searched 3 web sites done the calculater in my pocket knowing i could be paying lets say (its not this amount) £200 per month on repayment i then phoned my morgage provider and said ok its ending what can you offer me there offer was 202 per month 1 year 208 2 year 3 year was 213 and 5 year 220 its down to what security you want but realy the intrest rate is unlightly to go lower and poss creap 1/4 percent every few years so realy it much of a muchness if you do the year at a time is will be the best probably but as the rate/inflation goes up over 5 years i went for the 5 year i pay a little more over the first 2 years about the same for the 1.5 years after that and when on the last 1.5 year pay a little less (if you add in morgages they will go up slightly over the 5 year period)

remember if you got the time you could prob save a few quid over 5year if you move ring them every year for the next 5 years but wont be much but there is a line they will not cross and if you have to move to a differant provider you will need x amount of bank statments payslips and sending details like you passport/driving liceance costing you time and a few quid in special delivery

only thing to add is get out clause cheak what this is can you have a brake from the morgage if need be and over repayment what extra can you pay if you have the extra money

the main thing is dont not be on an offer deal like your utility gas electic as long as your on a deal not the standard rate you will be near where you need to be if i was not on a deal for my gas and electic i would be paying an extra £300 a year

AND CHEAK WHEN YOU GETTING THE PRICE ITS A REPAYMENT NOT INTREST ONLY OR YOU WILL NOT BE ACTUALY BE PAYING IT OFF

 

[rockweasel]

When we took out our first mortgage it was an endowment. We took it out on good faith. A few years later when they began to fall out of flavour, we looked at switching lenders and maybe changing to a repayment. The financial advisor at the time said it wasn't worth changing (to repayment), but we did find a much cheaper lender. We received red letters for years warning us that the endowment policy was going to fall short and to make provisions for making up the difference. We had no cash spare at the time, so the letters ended up in the fireplace - saving a little on heating bills. A few years ago I started overpaying the interest on the mortgage once things got a bit easier financially. As we had already tightened out belts, it wasn't any additional hardship to put the extra cash into the mortgage. All going well the mortgage gets paid off in 12 months (7 years early) with enough left to put in double glazing. We're planning to go out for a meal to celebrate (£60 budget!), then channel all the £ that used to go towards the mortgage repayments/critical illness cover etc into my pension fund that has been neglected for too long. I'm not enough of a financial wizard to be confident in what to do, so we'll have a chat with an IFA to hatch a plan.

Summary: Money can be complicated. An independent financial advisor is worth considering.

 

[angellonewolf]

^^^^^i have known a few that come up short as well

 

[puffernutter]

I had £54k in endowments. They returned 25k!

:-(

On the other hand a few years ago when my fixed deal expired, they offered me another one, for a fee. We did the maths, decided it wasn't worth it and just it if become their "default rate" which was 0.49% above base rate! That was 10+ years ago

:-)

PN

 

[armalites]

In most cases the only people who've done ok with endowments are the people who kept them running after they switched to a repayment and then ended up with a nice lump sum before the end of the mortgage.

 

[puffernutter]

In most cases the only people who've done ok with endowments are the people who kept them running after they switched to a repayment and then ended up with a nice lump sum before the end of the mortgage.

Would have been nice, but never had the money at that time to switch to repayment for all the mortgage and fund the endowment. Yes, it is more expensive now, but I'm more able to cope with it. Hindsight is an exact science. There are many financial decisions I'd love to go back and do differently......

 

[matt1978]

Someone told me that if your on your typical repayment mortgage, the interest is calculated Daily, but you only pay monthly, therefore incurring circa 30 days of interest, where as if you switch you payment to weekly (the monthly sum split by 4) then as the weeks in the month go more of your payment is paying off the loan rather than the interest.

I have to admit it makes perfect sense but I have yet to get round to changing my monthly Dirext Debit in place of 4 standing orders, also I remember when I last looked on my online account I couldn’t see/find the account number and sort code for the lender.

Chap said it could save you years over the life of a average mortgage, does it sound realistic to anyone else?

 

[angellonewolf]

^^^^^^ would love to know if this is true

 

[addjunkie]

Any overpayment or early payment saves you a fortune. When rates dropped years ago, I left payment the same. The overpayments were not large but saved me a fortune by shortening the term by 9 years

Then I bought a farm and have never had any money since

 

[Pete.]

Someone told me that if your on your typical repayment mortgage, the interest is calculated Daily, but you only pay monthly, therefore incurring circa 30 days of interest, where as if you switch you payment to weekly (the monthly sum split by 4) then as the weeks in the month go more of your payment is paying off the loan rather than the interest.

I have to admit it makes perfect sense but I have yet to get round to changing my monthly Dirext Debit in place of 4 standing orders, also I remember when I last looked on my online account I couldn’t see/find the account number and sort code for the lender.

Chap said it could save you years over the life of a average mortgage, does it sound realistic to anyone else?

It sounds like something that would be all over the money saving websites if it was true.

 

[armalites]

It sounds like something that would be all over the money saving websites if it was true.

That's what I would think too given the big stories about getting energy companies to refund your credit instead of allowing them to sit on it.

 

[tlovatt]

Someone told me that if your on your typical repayment mortgage, the interest is calculated Daily, but you only pay monthly, therefore incurring circa 30 days of interest, where as if you switch you payment to weekly (the monthly sum split by 4) then as the weeks in the month go more of your payment is paying off the loan rather than the interest.

I have to admit it makes perfect sense but I have yet to get round to changing my monthly Dirext Debit in place of 4 standing orders, also I remember when I last looked on my online account I couldn’t see/find the account number and sort code for the lender.

Chap said it could save you years over the life of a average mortgage, does it sound realistic to anyone else?

It depends upon your mortgage, mine used to only credit any payments during the month on the last day - but it also depends how often you are paid. If you only receive pay once a month then it makes more sense to pay your mortgage once a month.

 

[garethp]

Might be worth asking you current lender what they can offer and tell them you're looking around for the best deal, when our reduced rate expired and I looked at moving it wasn't worth moving as our lender gave us another reduced rate. Also the LTV percentage dropped so that gave us a lower rate as well.

IIRC if I'd done nothing the monthly cost would have gone up by £120ish but by making a quick call the monthly cost actually dropped by £50ish.

 

[Olderisbetter]

My mortgage was up last November i have a guy that normally does it but i looked on the website of the lender i was using already and it allowed me to view other products to swap to by putting in my mortgage account number, No fee no agent saved £50 a month, Maybe worth a call to your lender see if they do the same, I was using mortgage works and took a 5 year deal as i know i like the price and with brexit the prices have started moving and i know i am steady for 5 years at least.

 

[matt1978]

I don’t think the lenders like you do it which is why it’s not publicised. But if your interest is calculated daily and you only make one payment per month, it stands to reason, a proportion of that payment will go towards servicing 30 days of interest.