Remortgage Deal!

Psycho Sonny · 7 Aug 2017 at 14:01

samcat said:
They should ask, and its in all the paperwork:
http://personal.natwest.com/persona.../loan-purposes/_jcr_content/par/canvas_0.html

Be careful... If your mortgage is with Natwest and you take a loan with them then pay the same/similar amount off your mortgage it will be noticed (there is software to keep a watch for this), they will follow up with you wanting details and worst case they will call in the loan (ie you will have to pay it back in full right away).

this is precisely why I haven't done it. I imagine it wouldn't be above board. however it's all terms and conditions to cover their own profits rather than being in the best interest of their customers. the loan would have to be with my own bank (nationwide) as they will beat any loan i am accepted for by 0.5%. so i can apply for a loan at 2.8% and if i'm accepted I show them proof and they give me the same loan at 2.3%.

GinG · 1 Sep 2017 at 14:55

Just called up Nationwide...keeping the same term will potentially drop our payments £170 per month and that is on a 3 year Fix, or around £130 a month for a 5 year fix.

Tempted to go with the 5 year for security as I will be changing jobs with a 50% pay cut initially but by year 5 should be back up closer to where I am today.

Psycho Sonny · 3 Sep 2017 at 09:32

GinG said:
Just called up Nationwide...keeping the same term will potentially drop our payments £170 per month and that is on a 3 year Fix, or around £130 a month for a 5 year fix.

Tempted to go with the 5 year for security as I will be changing jobs with a 50% pay cut initially but by year 5 should be back up closer to where I am today.

Go for the 3 year fix and the extra £40 a month you save just use that to overpay the mortgage. That way when you remortgage again you will get a better deal as you have more equity. You will also have less to pay so your monthly should go down again.

Duke · 3 Sep 2017 at 10:13

I'm exactly 3 years into my 5 year fixed 3.98% mortgage and can't wait to get it on a lower %... hopefully it will be by that point. I'm overpaying a bit already as my mortgage is cheap due to putting in a lot of cash initially into the purchase.

DarkHorizon472 · 3 Sep 2017 at 10:14

GinG said:
Just called up Nationwide...keeping the same term will potentially drop our payments £170 per month and that is on a 3 year Fix, or around £130 a month for a 5 year fix.

Tempted to go with the 5 year for security as I will be changing jobs with a 50% pay cut initially but by year 5 should be back up closer to where I am today.

Sounds like a sensible approach as you value certainy over the next five years and if in three years time interest rates shot up you would be covered.

Psycho Sonny · 3 Sep 2017 at 12:42

DarkHorizon472 said:
Sounds like a sensible approach as you value certainy over the next five years and if in three years time interest rates shot up you would be covered.

fixing for 5 years makes no sense.

with 3 years he is on a lower interest rate = he will pay more off within 3 years compared to 5 year fixed.

he will have more disposable which he can use to overpay which further eats into the loan as well as gaining more equity within 3 years.

he can then in 3 years time with a much lower LTV get a much better deal even if rates have shot up he will be able to get better deals due to equity being higher to get into better bracket.

Ahleckz · 3 Sep 2017 at 12:48

I'm 18 months into a 3 year fixed with Nationwide. I've got £5k doing nothing in my current account so thought it best putting it into the mortgage. From what I'm reading, they can reduce the term or the payments. I don't want either of these, I just want a one off overpayment. This is possible right, and I'm just misreading their website?
Failing that, it seems I can overpay by £500 a month and nothing changes but that would cost me more interest...

Edit: I'm an idiot. Need to check my paperwork to see how much I can pay off in one go as it's not a standard.

CaptainRAVE · 3 Sep 2017 at 12:51

Remortgaged this summer and got something crazy like 0.5-0.7%. Can't complain about that really. Not interested in paying it off at this stage, just reinvesting into additional properties.

HungryHippos · 3 Sep 2017 at 13:02

Ahleckz said:
I'm 18 months into a 3 year fixed with Nationwide. I've got £5k doing nothing in my current account so thought it best putting it into the mortgage. From what I'm reading, they can reduce the term or the payments. I don't want either of these, I just want a one off overpayment. This is possible right, and I'm just misreading their website?
Failing that, it seems I can overpay by £500 a month and nothing changes but that would cost me more interest...

Edit: I'm an idiot. Need to check my paperwork to see how much I can pay off in one go as it's not a standard.

Most standard Nationwide ones were just letting you pay off £500 a month. If you had a tracker or similar then you can generally pay off as much as you like.

If you just want to reduce the outstanding balance then pick the option to reduce the duration should be fine. If your monthly payments are higher than you'd like then pick the option to keep the term but reduce the payments instead which will re-evaluate all of your remaining payments.

Both options are reducing what you owe in the end.

CaptainRAVE said:
Remortgaged this summer and got something crazy like 0.5-0.7%. Can't complain about that really. Not interested in paying it off at this stage, just reinvesting into additional properties.

I don't think anyone does rates that low, are you sure you don't mean 1.5 - 1.7%?

DarkHorizon472 · 3 Sep 2017 at 13:07

Psycho Sonny said:
fixing for 5 years makes no sense.

with 3 years he is on a lower interest rate = he will pay more off within 3 years compared to 5 year fixed.

he will have more disposable which he can use to overpay which further eats into the loan as well as gaining more equity within 3 years.

he can then in 3 years time with a much lower LTV get a much better deal even if rates have shot up he will be able to get better deals due to equity being higher to get into better bracket.

Depends on what the key things are for you in the decision. £40 x 36 = £1660, if you are unlucky in three years time with higher interest rates that could be gone within a year. They said they wanted certainty and that's what a 5 year fix gives.

Its all relative if the mortgage is for £200,000, £1660 makes no significant difference. I have no idea on their income, equity or mortgage amount.

Psycho Sonny · 3 Sep 2017 at 14:35

DarkHorizon472 said:
Depends on what the key things are for you in the decision. £40 x 36 = £1660, if you are unlucky in three years time with higher interest rates that could be gone within a year. They said they wanted certainty and that's what a 5 year fix gives.

Its all relative if the mortgage is for £200,000, £1660 makes no significant difference. I have no idea on their income, equity or mortgage amount.

It's not as simple as that. 3 year fix has lower interest rate than a 5 year fix. So it could be £10k savings. If he also uses the extra £40 to make overpayments it could be £12k saved.

If that's enough to push him into a better LTV bracket come deal time then it's even more savings on top so it turns into £20k. Will he save that over 2 years with a 5 year fix? Only if interest rates skyrocket which nobody in Britain can afford

Psycho Sonny · 3 Sep 2017 at 14:39

Ahleckz said:
I'm 18 months into a 3 year fixed with Nationwide. I've got £5k doing nothing in my current account so thought it best putting it into the mortgage. From what I'm reading, they can reduce the term or the payments. I don't want either of these, I just want a one off overpayment. This is possible right, and I'm just misreading their website?
Failing that, it seems I can overpay by £500 a month and nothing changes but that would cost me more interest...

Edit: I'm an idiot. Need to check my paperwork to see how much I can pay off in one go as it's not a standard.

You can overpay 10 percent of the original loan amount every year without any fees.

Also you have to choose between it ending early and fixed payments or fixed term and reduced payments. Smart thing is to reduce payments and fix the term offers you more flexibility and you can overpay more with reduced payments and you have the option to have more disposable income whenever you like. So if you get hit with a big bill it's not as worrying

Russinating · 3 Sep 2017 at 15:10

It shows you're old but remortgaging does feel great. We went from 3.89% over 35 years (2 years fixed) to 2.09% over 25 years (5 years fixed) all whilst taking out 10% of the increase in property value as capital but keeping the LTV at 60% from an original 90%. Nom nom nom.

I don't know if you already did this but via a broker the main thing they focus on is total amount payable during the period. The interest rate we got was much higher than some others (which I was tempted to get just to have a nice low number to grin at) but because of booking, arrangement, valuation fees and cashback it was the lowest cost of all over the period. I'm still yet to find a website that allows you to see (and sort by) that which makes the broker useful just for that.

Duke · 3 Sep 2017 at 18:42

As someone who went on 5 year fixed, I would suggest only going to 3 year fixed max. I needed certainty being my first mortgage and being the only person paying for it but would have gone for 3 now if doing it again.

GinG · 4 Sep 2017 at 13:49

Thanks for the advice regarding the 3 & 5 year deals guys.

Looking at the overall cost for comparison:

3 Year Fix - 3.3%APRC
5 Year Fix - 3.1%APRC

Should I be taking any note of these?

I also have an option of a 10 year fix, would anyone ever consider this? £780 per month 3.09% rate and a 3.3% APRC.

Russinating · 4 Sep 2017 at 14:00

Like I said above I've not yet found a website that shows you total cost over the period of the mortgage but if someone has then that'd be really useful (for me, too!). They all show you the total cost over the period of the 25 years (or whatever) but that's irrelevant since they all go on to a terrible rate after the initial period and the cost would only be accurate if you didn't switch after the initial rate period.

GinG · 4 Sep 2017 at 14:35

Ah ok, so the overall comparison is including the standard rate hence why the shorter terms show a slightly higher cost as it assumes you will stay on the SMR for the rest of mortgage.

I know its all about the crystal ball, however can we really see the rates increasing especially after Brexit?

Appeciate the 3 year is cheaper...just thinking with a £20K drop in wage a fixed 5 year deal may give us a bit more stability whilst the wage builds itself back up?

Russinating · 4 Sep 2017 at 14:55

Yeah the overall comparison is for the full 25 years, so it costs up both the 2/5 years at the fixed rate PLUS the remaining 20/23 years at the stupidly high current variable rate.

It might be worth you seeing a broker, most are free unless you actually use them but ours was very useful and we've used him twice. They often get better deals than are available publicly and more tools such as cost over 2/5 years to compare.

Psycho Sonny · 4 Sep 2017 at 16:20

money saving expert has some really good calculators.

http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator

GinG said:
Thanks for the advice regarding the 3 & 5 year deals guys.

Looking at the overall cost for comparison:

3 Year Fix - 3.3%APRC
5 Year Fix - 3.1%APRC

Should I be taking any note of these?

I also have an option of a 10 year fix, would anyone ever consider this? £780 per month 3.09% rate and a 3.3% APRC.

overall cost is the most misleading thing to look at. you want to look at interest rate during the deal period only.

use this to compare 2 mortgages

http://www.moneysavingexpert.com/mortgages/compare-mortgage-rates

again a few of the things are misleading like cost over 3 years if you have fees as this spreads the cost of the fee over the entire mortgage whereas it should really be 3 years. debt remaining is a good one as you can see which mortgage helps push you into a better LTV come renewal time. again it's not fair to compare a 3 year fix and a 5 year fix over 5 years.

Mercenary Keyboard Warrior · 5 Sep 2017 at 08:47

Latest expectations is that it will be 2019 before we see an interest rate rise.
As far as length of fixes its really a personal feeling thing, plenty will say only fix short etc, which is fine when you look at recent history on recent rates.
Go back 10 years and you see a very different view, it was very very difficult to obtain mortgage finance at that point, even remortgaging, just because the markets are low and very fluid now doesn't mean they will remain so.

Other thing about longer fixes is they look less to current rates and more to longer term ones.

The best thing to do mentally with a long term fix is forget it, thats the point, the certainty so don't keep looking at rates and dwelling on how you could have paid x or y, just forget it.
Fixing is a gamble with no certain outcome, the shorter the fix the less of a gamble on rates, but the more of a gamble on the state of the market / interest rates in years to come

good luck