Pros and cons of long-term remortgages
Wednesday, 02 January 2008 12:00
A reader wants to know the pros and cons of a long-term 25-year remortgage as a way keeping monthly repayments down.
Drawing on years of experience, mortgage adviser Katie Tucker - of mortgage broker mortgage broker charcol.co.uk - takes him through the situation and what it means for his finances.
Joyce asks:
I am interested in a 25-year long-term mortgage but am no expert on interest rates have been badly advised twice through independent mortgage advisors and need to find the cheapest mortgage at moment.
My house is worth £165,000 and I have a £150,000 interest-only mortgage.
I need help to keep payments as low as possible hopefully around £900 a month.
I'm not one for moving so penalties don't bother me and I'm staying here for life as I love my new house.
Please advise us on best deals at moment.
Katie responds:
The 'best deal' is a very different deal for one person to that of another.
You must ensure that a deal is chosen with the right fees, right early repayment charge set-up, affordable monthly payments and the right repayment plan, for you personally.
This means that you need to explain your priorities, details of earnings and your future plans to an advisor who will be able to tell you what is available on the day.
The conversation should take half an hour to an hour, and you can normally do this on the phone or face-to-face. Charcol, who I work for, offers both services, as well as an online search facility, as do many other brokers. You will be given a full quote detailing all fees and when they are payable, before you have to commit to paying anything.
Charcol's contact details are www.charcol.co.ukand myfinances.co.uk also recommends Mortgage Finder.
Unfortunately, without knowing all of your details, or an idea of your credit history, I can't offer any suggestions, so please make a phone call to a broker today so that you can be talked through the process.
I must also say that brokers are legally regulated now, and have been for just over three years.
This means that any advice you receive from now on must be absolutely accurate, and if it is not, you can contact them or the financial services authorities, to have any mistakes rectified.
If the advice that you aren't happy with is more recent than October 31st 2004, you should have a Key Facts Illustration (KFI) which is the multiple-page quote with KEY FACTS written at the top. The last page of this will have contact details for you in case of complaint.
On another note, you probably have the ability to "over pay" your mortgage. This means that you can put extra in and this will pay off some of the capital debt. If you call your bank, they can calculate for you what you would need to pay to make your interest-only mortgage the same as a repayment one.
Best of luck,
Katie.
If you have a question for Katie, go to the myfinances.co.uk Ask the Mortgage Expert section.
For more information on the issues discussed here, go to mortgage broker charcol.co.uk or call 0800 358 5560.
Charcol Limited is authorised and regulated by the Financial Services Authority (FSA registration number 427339). The FSA does not regulate credit cards, personal loans or some investment mortgage contracts. Some buy-to-let mortgages are regulated by the Consumer Credit Act (CCA).
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