Remortgaging

[rcx132]

Thanks for tips. Also spoke to some of the geeks at work, they are saying that there are huge savings to be made by remortgaging as soon as the introductory rate expires, but there are catches. I did some napkin calculations and I could save four figure numbers per year even after all the valuation and product fees. I guess in the south east with our crazy prices we have more potential savings to make.

But there's catches, e.g. it assumes you can remortgage when the intro rate finishes. So if your income goes down you could be stuck on a terrible rate as now one will remortgage you.

Hopefully will find some more time to get some more info on this soon.

 

[brewdexta]

The best thing I ever did was swap mortgages and get a current account offset mortgage. This one, no longer available to new applicants but I am sure there are others out there.

The idea is that your current account goes into the red by the amount of your mortgage. Interest is charged daily, when your wages go in you pay less interest. After a few years I was ahead of plan by quite a bit which meant I could use that cash as I want, so I bought a new(ish) car on my debit card and paid mortgage rate interest without having to apply for finance. I have used this to finance all my building work on the house and other big purchases, so other than the mortgage I haven't had any finance.

 

[rtbcomp]

^^ Barclays did a similar thing. I suspect it was dropped because it gave their customers a good deal, which goes against the ethos of the financial services industry.

 

[armalites]

It's a massively complex subject and it's very easy to end up tied to something with no flexibility and sometimes the ones that look the cheapest aren't.

My Barclays mortgage is a fixed rate but I can pay off up to 10% of the outstanding balance every over and above my payments. So I just added a regular over payment, for me it was the equivalent of paying 13months every year, I've only been doing that for a couple of years and it's already knocked 9months off my term and I'm already over the hump as I have 5 years left.

As they are such long term things it's very difficult to get into the mindset that even £50-100 extra a month will make a difference. Now my rate has gone down I'm carrying on with the same payment level and this should reduce my final 5yrs to approx 3.75yrs

My advice would be stay with your current lender if they have any decent deals and fix for as long as you can. With rates as low as they are chopping an changing every year isn't really going to save you that much and there will always be some sort of fees if you switching to a new lender as well as all the usual stuff like valuations.

 

[addjunkie]

If you are over paying, mine is similar to above with the 10% etc with nationwide. There are two ways money is taken. One as above to reduce the term, the other the extra sits as an independant sum reducing your outstanding balance. Therefore your not paying interest on the full balance, so reduces the term more slowly but if your circumstances change you can get the overpayment back.

So lets say you have savings receiving .75% interest and your mortgage rate is 3.75%. Its a no brainer where to but your bit of savings.

You need to tell them which way you want your overpayment to be handled.

 

[Migmac]

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.

We were advised to this, sold our first house, paid the mortgage off but kept the endowment going. Built new house, simple repayment mortgage. Ten years or so later sold the endowment and paid the mortgage off. As far as i’m concerned it was good advice and worked for me

 

[jenki]

I'm not sure how relevant this will be now, I paid my mortgage off 10 years ago.

Same as someone on here said I had an interest only mortgage with an endowment to pay the capital sum I soon realised this was a huge mistake and started overpaying to subsequently find that Halifax do not credit the overpayment but put the money in a suspense account and the amount owing remains the same. Long story short said goodbye to Halifax and hello to Nationwide who at the time allowed almost unlimited overpayments.

Then after discussing it with a trusted friend I started borrowing 'interest free' on credit cards and using the borrowed money to payoff the mortgage lump sum net result mortgage paid off in 5 years after the remortgage; IIRC I had 10 cards on the go at one time with all the end dates on a spreadsheet it did take a bit of juggling at the time.

The final prize was to treat myself to a holiday in New Zealand on 6 months interest free credit when the mortgage was paid off.

 

[rcx132]

I'm not sure how relevant this will be now, I paid my mortgage off 10 years ago.

Same as someone on here said I had an interest only mortgage with an endowment to pay the capital sum I soon realised this was a huge mistake and started overpaying to subsequently find that Halifax do not credit the overpayment but put the money in a suspense account and the amount owing remains the same. Long story short said goodbye to Halifax and hello to Nationwide who at the time allowed almost unlimited overpayments.

Then after discussing it with a trusted friend I started borrowing 'interest free' on credit cards and using the borrowed money to payoff the mortgage lump sum net result mortgage paid off in 5 years after the remortgage; IIRC I had 10 cards on the go at one time with all the end dates on a spreadsheet it did take a bit of juggling at the time.

The final prize was to treat myself to a holiday in New Zealand on 6 months interest free credit when the mortgage was paid off.

My mum did something like that and it paid off but I think those were different times, it's not so easy now.

 

[armalites]

I'm not sure how relevant this will be now, I paid my mortgage off 10 years ago.

Same as someone on here said I had an interest only mortgage with an endowment to pay the capital sum I soon realised this was a huge mistake and started overpaying to subsequently find that Halifax do not credit the overpayment but put the money in a suspense account and the amount owing remains the same. Long story short said goodbye to Halifax and hello to Nationwide who at the time allowed almost unlimited overpayments.

Then after discussing it with a trusted friend I started borrowing 'interest free' on credit cards and using the borrowed money to payoff the mortgage lump sum net result mortgage paid off in 5 years after the remortgage; IIRC I had 10 cards on the go at one time with all the end dates on a spreadsheet it did take a bit of juggling at the time.

The final prize was to treat myself to a holiday in New Zealand on 6 months interest free credit when the mortgage was paid off.

The problem now is most interest free credit card balance transfers have a 3%(or similar) handling fee so if you could find one that was life of the balance it would be worthwhile. The other benefit is it's not tied to your property so if you get into trouble they can't take your house.

 

[Kent]

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

Ours gave us about what we payed in consconsidering the compensation. Thing was we where still paying it in our 3 rd house ebev though it was on our first and sll others where capital repayment.
Very glad the broker went broke actually and I do not say this lightly about anyone

 

[rcx132]

Have spoken to my current lender, Barclays, and they have offered a new low rate to replace the fall-back rate. It's not as good as what I could get if I remortgage, but I avoid product fees, and solicitor and revaluation fees, not to mention the paperwork, I'm actually better off NOT remortgaging and just accepting Barclays loyalty rate that they've offered.

 

[angellonewolf]

somes times you got to way up moving and untill you get offered the morgage it not a defo they may offer xyz percent but its only when you give them the details they say no or yes

so as its your lender now they do not need these details so sometimes its better saying yes to slightly not as good offer to make it easy on your self

you need to look at deals this way your now rate you will be reciving is £400 a month on the fall back rate

a new lender if accepted you could be paying £340 a month but this is after acceptance of your in comings and out goings, credit card, loans, car loan, etc they might not like what they see when you provide the info thay want

the new rate your actual bank will offer is £365 per month yes its more than the £340 of the ideal morgauge but do not look it it this way the £340 is an offer not a guaranteed morgage your offer of £365 is still saving you £35 extra a month over £400 a year that a good offer think of it as saving £400 a year

i do not know your actual payments but you get what i mean

 

[winchman]

You have to calculate it all as one.
Look at what you are paying and how the total amount is decreasing.
Consider if you are likely to over pay?
Ours was set up so we had a minimum we had to pay so we could afford it on one wage but we could over pay when ever, so when both working we paid double and saved a fortune ( several thousand) and got rid quicker.
Its all down to your ability to pay and working out exactly how the payments are spent

 

[rtbcomp]

... The other benefit is it's not tied to your property so if you get into trouble they can't take your house.

Unless they sue you for bankruptcy. Having your house as collateral just makes things easier for them.