Remortgage Deal!

Ace Modder · 2 Aug 2017 at 11:48

Hi all.

I'm coming to the end of my 2 year fixed term mortgage with my current mortgage provider I can get a new deal 3 months before the 2 year term is up.

I just called them to discuss my options, currently my APR is poor at 4.39% but this is due to me only putting 5% down on my first mortgage.

I have spoken to my provider and as my property has increased in value by 11% since buying it (according to them - I wasn't expecting that) and I have been making overpayments each month my current LTV is now in the 80-85% bracket.

They have given me a new rate of 1.44%.

This has significantly reduced my monthly payment, I have accepted and this is being processed now. I plan to make the payments that was my standard repayment at 4.39% leaving the term the same, but manually overpaying each month - this is just below the cap per year so no fees or charges are made.

This means my 28 years remaining will drop by 96 months / 8 years.

I'm currently buzzing my **** off!!!

My long term game plan was always to have my mortgage totally cleared in 15 years - original term was 30 years, taken out December 2015. I'm very much on target to continue this!

Kemik · 2 Aug 2017 at 11:57

Good news! Although, did you check sites like MoneySavingExpert to make sure there aren't any better rates? Don't forget to consider all of the fees too.

Ace Modder · 2 Aug 2017 at 12:01

Well the fee is £999 but if I don't pay it upfront they can give me a 1.8% rate which is how they get the fee's covered. The interesting thing is fixed 2 years the 1.44% to 1.8% difference is £22 a month, so only £528 charge for the 2 year period. So actually I fancy going with that option as it works out the best deal.

I have considered other providers but isn't it far more hassle to switch to a new provide instead of staying with the same? Best rate is 1.39% using a couple of compare sites.
(Plus my current provider gives a £500 bonus for doing a new mortgage contract with them - paid 1 month after first payment for the new deal is made)

Wink · 2 Aug 2017 at 12:24

Went through the same fairly recently but I reduced the term by about 8 years and kept my payments roughly the same. I used to overpay previously as well so plan to keep going with that.

Only got mine down to 2% but fixed for 5-years with no fee.

tom_nieto · 2 Aug 2017 at 12:45

It's less hassle to stay with the same lender as they have all your details and records on file, but switching could save you some cash. Only you can decide whether it's worthwhile with your exact sums.

Ace Modder · 2 Aug 2017 at 13:05

Well the difference between switching to a new provider vs staying with who I'm with is only saving me around £20 a month-ish. But I have the 3 month early offer to stay with same provider which I don't have if I switch and also the £500 cashback to stay.

My other concern would be whether another provider would give the same new value?

azazl187 · 2 Aug 2017 at 13:10

This is encouraging news as my term will be up in just under a year. My last deal was pretty good though so i doubt ill beat it but i will certainly try. Ive had my house a year and it was 300K which means ill be paying my mortgage for the next 30 years haha!

Ace Modder · 2 Aug 2017 at 13:13

azazl187 said:
This is encouraging news as my term will be up in just under a year. My last deal was pretty good though so i doubt ill beat it but i will certainly try. Ive had my house a year and it was 300K which means ill be paying my mortgage for the next 30 years haha!

How old are you? I'm 36 end of this month, so I told my first mortgage out when I was 33 and had it over 30 years. I want mine paying off fully before I'm 50's at the worst case. That's 17 years. Ideally aiming for 15 years.

touch · 2 Aug 2017 at 13:15

Did your provider contact you about renewing or did you call them?
My deal finishes in 3 months.

Admiral Huddy · 2 Aug 2017 at 13:15

You won't regret doing that since it's a better return you'll get from saving overall. I'm trying to convince my brother in law to do the same thing since you won't feel the effect on what you are paying already..

I started overpaying ten years ago and as it happens I finished my mortgage this year, 10 years earlier.. It's a massive relief to not have that over your head, and it means if i'm made redundant, that's it, **** it, i'm retiring

azazl187 · 2 Aug 2017 at 13:18

Ace Modder said:
How old are you? I'm 36 end of this month, so I told my first mortgage out when I was 33 and had it over 30 years. I want mine paying off fully before I'm 50's at the worst case. That's 17 years. Ideally aiming for 15 years.

Same age as you. I was 35 in April and we have owned the property since April 2016. I simply cannot afford to over pay at the moment so ill just be paying the standard mortgage repayments.

azazl187 · 2 Aug 2017 at 13:21

Admiral Huddy said:
You won't regret doing that since it's a better return you'll get from saving overall. I'm trying to convince my brother in law to do the same thing since you won't feel the effect on what you are paying already..

I started overpaying ten years ago and as it happens I finished my mortgage this year, 10 years earlier.. It's a massive relief to not have that over your head, and it means if i'm made redundant, that's it, **** it, i'm retiring

Good for you buddy. a lot of people moan about money and how little they have but in reality a lot of the time its because they are not looking at the big picture. Enjoy your house dude

Admiral Huddy · 2 Aug 2017 at 13:30

azazl187 said:
Good for you buddy. a lot of people moan about money and how little they have but in reality a lot of the time its because they are not looking at the big picture. Enjoy your house dude

Thank you.. I think the key is trying not to live beyond your means, keeping your feet on the ground so to speak. We stuck with the same home all this time and avoided moving just for the sake of it and being happy with what we have. I know things have changed over the last ten years making this almost impossible for younger people.. We were very lucky to buy ours during the last housing slump so we did get a bargain. Sorry for diverting derailing your thread Ace.

MG42Maniac · 2 Aug 2017 at 14:07

I will be in a similar position. We are looking to put down a 5% deposit on a house around the 350K-400K range. We are expecting monthly payments of around £1700-£1800. The plan is to try and overpay by around £1000 each month so we can remortgage at a better rate. I'd love to save a 10% deposit but we are paying £950 rent so the sooner we get on the ladder, the better.

Syla5 · 2 Aug 2017 at 14:46

Ace Modder said:
.
This has significantly reduced my monthly payment, I have accepted and this is being processed now. I plan to make the payments that was my standard repayment at 4.39% leaving the term the same, but manually overpaying each month - this is just below the cap per year so no fees or charges are made.

Honestly why give yourself the hassle? Just reduce the term until your new mortgage offer monthly payment is the same as it currently is on the 4.39%.

Ace Modder · 2 Aug 2017 at 15:10

Syla5 said:
Honestly why give yourself the hassle? Just reduce the term until your new mortgage offer monthly payment is the same as it currently is on the 4.39%.

Flexibility; incase my circumstances change (not that I expect they will any time soon), the overpayment takes me less than 10seconds using my phones bank app.

touch · 2 Aug 2017 at 15:11

MG42Maniac said:
I will be in a similar position. We are looking to put down a 5% deposit on a house around the 350K-400K range. We are expecting monthly payments of around £1700-£1800. The plan is to try and overpay by around £1000 each month so we can remortgage at a better rate. I'd love to save a 10% deposit but we are paying £950 rent so the sooner we get on the ladder, the better.

If your mortgage is going to be 1800 and you're going to overpay 1000, thats almost 3k outgoing each month. Minus your rent, you could be saving 2k a month - wouldn't it be better to just wait 8 months until you have a 10% deposit?

(maybe not - maybe it is cheaper to buy now and save on the rent payments. I'm just guessing at what rates you might get)

Ace Modder · 2 Aug 2017 at 15:16

MG42Maniac said:
I will be in a similar position. We are looking to put down a 5% deposit on a house around the 350K-400K range. We are expecting monthly payments of around £1700-£1800. The plan is to try and overpay by around £1000 each month so we can remortgage at a better rate. I'd love to save a 10% deposit but we are paying £950 rent so the sooner we get on the ladder, the better.

That is the same as my situation was 2 years ago, I was stuck in a rutt paying rent and finding it painful to increase my deposit by much. Interestingly once I'm on my new payment from September. My payment plan will be as follows:

Renting at (x) amount for years....

Decemeber 15 - buy house with 5% deposit, sold car to cover most of the 5% deposit and saved for 12 months prior to this (I was lucky as I had company car as well)
Mortgage payment at 4.39% = 90% of rental amount per month, overpaying around 25% of rental amount most months. So total cost per month was around 115% of rental amount.

Now new mortgage payment at 1.44% is 65% of rental amount for next 2 years! So I can pay 40% extra as overpayments and have the flexibility if I want to skip this occasionally - Xmas for example!

After this 2 year period of making the 40% overpayment for 10 months of the 12 each of the 2 years will mean I get down to < 70% LTV, thus giving me access to 1.09% - subject to the rates remaining as they are now. Thus saving me even more...

Long term goals work if you plan them correctly.

Calpol · 2 Aug 2017 at 15:18

Good for you OP.
One thing to bear in mind is just how flexible the mortgage allows you to be. A number of years ago I remortgaged with First Direct on their Offset Flexible Mortgage product. This did entail moving my bank account but since then I have offset my current account balance and savings vs the mortgage debt. The rate was 1% over base for the life of the mortgage which I think is until I am 65/retire. Like you I have taken advantage of the low interest rates to chunk capital off the debt and despite borrowing an additional sum to extend a couple of times I am at a point now where I could be mortgage free next year (just about). However There is no point in me clearing this as I wouldn't be able to borrow cheaper anywhere else for other expenses that may come along - like cars, childrens education, weddings! I may even utilise some of the debt to pay money into a pension product that get top rate tax relief.

By all means reduce your debt and give headroom but make don't necessarily aim to be debt free.

For example - I could take £20k out of the mortgage and pay it into a SIPP. The government would add 40% of that gross value to the investment (8k) and you have an instant return on money that will be available to you at 55 and tax free to a level.

I am not a financial advisor!! but I do wish i had used this period of low interest rates a little more creatively.

Ace Modder · 2 Aug 2017 at 15:25

@Calpol - I will look into this more, so doing it my way is better than reducing the term then for the lending you can get back against it in the future. Very interesting, so I could for example in 5 years time once my LTV is down to 50% increase my mortgage (effectively taking £15,000 maybe) whihc can be dumped into my currrent account for an extension or new kitchen and just increase my repayments to offset the extra owed moneys on my new mortgage with an extra $15k on the outstanding balance, is that right?