scooblube

I'm just coming of my fixed rate deal, 4.25% fixed for 5 years. After much searching I have managed to get a new product with HSBC. I owe 82k and house is valued at 210k with 15 years left to pay.

Tracker at 0.79 above base rate.

£599 set up fee, no other costs such as valuation etc.

Portable.

No redemption penalties.

Over payment option.

I pay 600 quid a month at the moment and with the new product it rises to 665, not a bad deal I thought??

I'm banking on the base rate dropping next year and then maybe fixing for ten years at a low rate.

HankScorpio

What's your current going to?
If you're in HSBC for 12 months, add your setup fee and you're paying equivalent of 715, if that's less than where you are after the rise, you'd be better staying there.

scooblube

Coventry who I'm with offered a tracker at 1.99% above base with £199 fee or fixed at 5.99% with a £1000 pound fee or variable @ 6.90 with no fee's.

£778 fixed
£801 tracker

fast bloke

10 year fixed rates won't drop substantially anyway, but that deal looks OK this week. It might be a good idea to put in an application for that one to secure the product, but hold fire for a week or two while the lenders work out what is likely to happen next.

scooblube

Yep done that, they hold it for 90 days and my mortgage does not end till Jan, it could all change in the next 3 months like you say.

lozgti

Blooming 'set up'fees.

What 'setting up'do they do.Or is it (I'm sure) money for nothing?

fast bloke

It is just a way of them offering more attractive headline rates. If you add 2k to your mortgage, the APR will calculate the 'set up fee' over 25 years, while in reality you will change deals in 2 or 5 years, so the APR will be irrelevant.

Say 50k loan, 4.99% two year tracker with 2k set up fee. APR will be about 5.2%, so looks nice, but if you change deals in two years the real rate you are paying is nearer 7.2%. However - if you do it on a 500k loan the APR is still 5.2% but the real rate is 5.25% (figures are a rough guide, so don't start taking me to bits on APR calculations )

scooblube

Why anyone would pay 2k for set up fees' is beyond me, £599 is a lot be at least it's an amount most people can pay rather than adding it to the loan.

fast bloke

It makes sense for bigger loans. If it saves you 200 quid a month for 24 months to pay a 2k fee, then you would be mad not to.

scooblube

See what your saying, I'll be glad when I'm mortgage free