Complex mortgage help
Discussion
My head is spinning with mortgage lingo, can anyone advise on the best route here in my situation? I'll try and summarise:
- Accepted offer on our place, looking at new houses, need to sort mortgage in principal.
- Current mortgage is an expired fix deal from 2006 with Nationwide. Interest only, but we've overpaid. Can make unlimited overpayments, take payment holidays, currently 2.5% and can never be more than 2% above base.
- Not much equity in existing place, will have 10% deposit for next, purchase approx £160k.
- Existing mortgage can port over but will switch to repayment which we don't mind, can't borrow more though.
- Additional borrowing (~£25k) would be on a new product, so approx 4% ish but a more restricted product.
Now I can see two possible routes:
1) Stick with Natiowide. New product on fixed rate for extra borrowing. Any overpayments can be paid on the more expensive 4% product first, however overpayment limits apply. Also our existing product is open to rate increases - whenever that may be. We'd also always have two products to deal with.
2) Get a new fixed mortgage from a new lender for the whole amount, have seen deals around 3.7%, everything is then fixed in stone and seems easier to manage.
I guess after doing the maths that we'd save money by taking advantage of our current 2.5% product. Plus it comes with benefits that the new products will not have. It just seems a faff to me having two products and I'm worried about rate rises, but then we could possibly switch that deal before any rise. Typing this down has helped actually ... I think.
Apologies for the waffle.
- Accepted offer on our place, looking at new houses, need to sort mortgage in principal.
- Current mortgage is an expired fix deal from 2006 with Nationwide. Interest only, but we've overpaid. Can make unlimited overpayments, take payment holidays, currently 2.5% and can never be more than 2% above base.
- Not much equity in existing place, will have 10% deposit for next, purchase approx £160k.
- Existing mortgage can port over but will switch to repayment which we don't mind, can't borrow more though.
- Additional borrowing (~£25k) would be on a new product, so approx 4% ish but a more restricted product.
Now I can see two possible routes:
1) Stick with Natiowide. New product on fixed rate for extra borrowing. Any overpayments can be paid on the more expensive 4% product first, however overpayment limits apply. Also our existing product is open to rate increases - whenever that may be. We'd also always have two products to deal with.
2) Get a new fixed mortgage from a new lender for the whole amount, have seen deals around 3.7%, everything is then fixed in stone and seems easier to manage.
I guess after doing the maths that we'd save money by taking advantage of our current 2.5% product. Plus it comes with benefits that the new products will not have. It just seems a faff to me having two products and I'm worried about rate rises, but then we could possibly switch that deal before any rise. Typing this down has helped actually ... I think.
Apologies for the waffle.
You won't get a cheaper rate on your current balance at 90% so it makes no sense to redeem that really. Having two products shouldn't cause you too many problems really, certainly not enough to warrant redeeming the current balance on 2.5% to a 90% product approaching 4%.
Even when rates start to rise the current balance at 2% above the base rate will probably always be cheaper than what is available elsewhere.
Even when rates start to rise the current balance at 2% above the base rate will probably always be cheaper than what is available elsewhere.
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