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Woolwich mortgage options

Just come to the end of a 2 year discount and have been sent the following options by the Woolwich:

1) A 1 year discounted rate opf 2.2% below SVR ((1624 per month) 2) A 2 yeardiscount rate of 2.00% below SVR - (1656 per month) 3) Barclays Bank Base Rate +0.4% for life - (1714 per month)

Otherwise it defaults to the SVR of 1990 per month.

Clearly it would be unwise to continue with the SVR particualry as option 3 seems to have no obvious tie ins. I were planning to move in either one or two years, which I am not, then discount rate would attract the penalty of 6 months (SVR) interest. Therefore I haven't ruled these out, though I need to work out what they do at the end of the discount period, eg SVR or basically a re-offer of option 3.

Does anyone have any strong opinions on this?

Reply to
Mike L
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There is no telling what might be on offer in 1 or 2 years' time. Option 3 looks a bit out of the ordinary and unique to me, and I wouldn't count on it remaining on the table forever. So assume options 1 and 2 drop to SVR on expiry, though there will no doubt be *some* offers even then, just to stop you defecting to another lender.

I would dismiss option 1, on the grounds that a 0.2% difference is insignificant and 2 years are better than 1, so it's down to choosing between options 2 and 3. Since SVR is likely to track base rate too, and seems, from your figures, to be about 2% above base, hence option 3 is equivalent ot a discount of 1.6% below SVR. If with option 2 you drop to SVR and there are *no* offers then (unlikely), then options 2 and 3 break even when "life" equals about 2.5 years. So if you stay with the lender for longer than that, option 3 is best only if no offers are available then. I think I'd probably go with option 2 and then wait and see.

I'd continue to budget £1990 anyway, and save the excess £334 per month in a fund to be used to pay down the loan by £8 or £9 k prior to renewing the discount deal. Better than frittering it away on fripperies.

Reply to
Ronald Raygun

The mortgage would move with you when you move, the penalty only applies if you repay the mortgage at this time - ie move to another provider. i would suggest, therefore, that the discounted options make sense

MC

Reply to
Marcus Collie

"Ronald Raygun" wrote

Why not make it a round 2000? ...

"Ronald Raygun" wrote

... or make this a round 350? Or 400?? ...

Reply to
Tim

Hi Mike,

Just one other consideration. You mentioned you were thinking of moving, and therefore the penalty on the discounted rate would apply. Woolwich tend to offer a portability claues on their discounted & fixed rates - if you move house, you can move the mortgage, without penalty, provided the sale and purchase complete within 90 days of each other. Also, they normally allow

10% capital redemption each year, without penalty.

At the end of the discount period, under their current terms, if you do nothing, you go to SVR, but there is normally no extended tie, so you are free to move to a new lender. Therefore, I would tend to agree with Ronald - I'm sure they will have some offers to keep you.

Hope that helps the decision process, but if not, let me know - I have some experience of Woolwich mortgages.....

Regards Mav

Reply to
Mav

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