Weird mortgage thing

Don
Joined
18 Oct 2002
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Notts
Need to remotgage soon as deal finishing

currently on SVR -1.75% , which, due to my provider being a bunch of ***** is 4.24% after discount

now I have been on the comparison sites and there are many tracker deals at around base + 2.75% ( and to think I used to have one at base +0.14% ) so this comes out at 3.25%

odd thing is that the monthly payments on all of them is higher that I am paying now

any ideas why ?
 

LiE

LiE

Soldato
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Milton Keynes
Instead of creating a new thread, I though I would ask here. Can someone explain how re-mortgaging works? I've come to the end of my 2 years fixed term and I'm now on SVR.
 
Permabanned
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Fylde Coast, Lancashire
there was 10yrs left on mortgage and new term is 10 yrs

Are they lumping the charges in with the mortgage? The charges are normally paid off first, along with front loaded interest. This is why in the first two years of a 25yr mortgage you don't actually make a dent in the mortgage - your monthly payments just pay off the charges and front loaded interest.

Check the total loan amounts - I reckon your total loan amount for the new mortgage will be a fair bit higher than the settlement amount on your existing mortgage, meaning higher monthly payments on the new mortgage.
 
Soldato
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SW London
there was 10yrs left on mortgage and new term is 10 yrs

There's your answer then.
Everything gets recalculated when you remortgage so the payments will likely end up more even with lower interest rates.

This is because towards the start of the mortgage you're mostly paying interest with very little capital repayment.

So, when you remortgage the actual portion of your payment going towards the capital at the start will be less than on your previous mortgage even though the overall repayment will be more.

You'd probably be better off doing a longer term and overpaying it.

Off to a meeting in a couple of minutes, but happy to explain more when I'm back if no-one else gets there first!

EDIT: Actually may be wrong on that looking at some calculations!!
 
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LiE

LiE

Soldato
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Milton Keynes
I thought people whose mortgage deals were ending now were enjoying low re-payments

Indeed, my monthly repayments dropped by £150 when I went onto SVR. The problem is, how long do you wait before tying into a fixed term rate?
 
Soldato
Joined
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Chatteris
I've been on standard rate since around March and I'm enjoying much lower repayments than while I was still on my last "deal".

I'm watching rates but they still don't seem to be going up at the moment.
The second they do start to move I'm going to lock myself in on a fixed for around 5 years - cuase once rates start going up they are going to rocket.
 
Soldato
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14 Feb 2004
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Peoples Republic of Histonia, Cambridge
nope, the new deals generally stink
Agreed, my new mortgage is 5.99%. So that's base rate +4.49%

That's the best we could do :(

I'm watching rates but they still don't seem to be going up at the moment.
The second they do start to move I'm going to lock myself in on a fixed for around 5 years - cuase once rates start going up they are going to rocket.
You'd hope some of that increase will be absorbed by the banks as their books begin to look more healthy. They can't keep charging 4-5% above base rate for ever. It's simply unsustainable to make that much margin from lending money to mortgage customers
 
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Soldato
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Chatteris
Our Building society can lock me into a 5yr fixed at 5.39% at the moment.
The current SVR is 4%.

You'd like to think the banks and building societies would absorb some of the costs - however history tells us different.
 
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