Hi all,
Quick question…
I have a property coming up for renewal. I am with Paragon Bank.
I was on a 5 year fixed term at 3.65% and gladly it’s coming to an end in the next 3 months.
My property indexed val is £500k and the debt is £325k with a rental of £1560pcm.
Paragon are happy for my to resign to a new 5 year fixed but it’s 3.50% on a 70% LTV, no fees, no vals etc…
Whereas Metrobank is at 2.29% for 5 year fixed with a fee of £1499 with no vals.
My point is, Paragon’s 5 year is 4.40% APRC whilst Metro Bank’s is 4.00%.
You would think, from the above, Metro’s would be 3.00% or something, but both’s APRC’s are only 0.4% different - can someone shed some light if they’ve come across this situation and what they did? I can do an equity release which will be nice, but I am not fussed.
Thanks!
Use a good broker. Worth their weight. He got me 4 diffetent re-mortgages (BTL interest only) between 1.4% and 1.65%
Hi David,
Which lenders were they?
Thanks.
Santander, TSB, Skipton and Accord. The deals change all the time though and a good broker will be able to access the whole range of lenders.
I suspect the APRCs are over the whole life of the loan, so the initial rates get overpowered by the reversion rates.
I always do a spreadsheet to compare the cost of the loan over the fixed period, in the knowledge that I will remortgage before I go onto the lender’s standard rate.
So, upfront cost, plus interest over the fix to give total cost (then if comparing different periods eg a 2 and a 5 year fix, divide by the fixed period to get an average annual cost).
My loans tend to be quite low (less than £100k), so I am usually better with no upfront fee and a slightly higher rate than a high upfront fee and a lower rate. If you have a larger loan, you may be better with an up front fee.
APRC is based on total cost over full term of loan and includes costs and fees.
I always use a trusted mortgage broker, despite (many years ago) having been one myself. They’ll find you great rates and save you a lot of time.