The Scenario
An applicant approached us to manage a product transfer as their fixed-rate mortgage was nearing its expiration. The property, based in Hook, Hampshire was valued at £890,000 (NatWest valuation: £838,805), had two mortgage parts with NatWest:
- Part 1: £296,101.05, with the current fixed rate expiring on 31st July 2024.
- Part 2: £334,458.94, with the current fixed rate expiring on 31st January 2025.
The applicant preferred to secure a five-year fixed rate for Part 1 of the mortgage to gain payment stability.
They wished to retain the original term of 21 years and seven months, ensuring the mortgage concluded before they reached the age of 70.
A key priority was avoiding early repayment charges (ERCs) on Part 2 of the mortgage by remaining with the current lender.
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The Challenge
This case presented several challenges:
- Maintaining the Term: The applicant did not wish to extend the mortgage term beyond their existing arrangement.
- Avoiding Early Repayment Charges: Transitioning Part 1 to a new fixed rate while retaining Part 2 on its current terms was essential to prevent additional fees.
- Competitive Product Selection: Identifying a suitable five-year fixed-rate product within NatWest’s offerings that met the applicant’s needs.
The Process
A detailed consultation provided insights into the applicant’s goals and financial position. Based on this, the following approach was taken:
- Staying with NatWest: Remaining with the current lender ensured no ERCs were incurred on Part 2 of the mortgage, while Part 1 could seamlessly transition to a new fixed rate.
- Choosing a Five-Year Fixed Rate: A five-year fixed rate was selected for Part 1 to offer stability and predictable payments. This aligned with the applicant’s preference for financial security over the medium term.
- Maintaining the Original Term: The mortgage term was preserved at 21 years and seven months, ensuring the loan concluded within the applicant’s desired timeline.
- Minimising Fees: A lower product fee of £395 was agreed upon, reflecting the ongoing relationship with the applicant and their preferences.
- Protection Discussions: Protection needs were reviewed, with the applicant opting to revisit these closer to completion.
The Solution
The recommended solution involved a product transfer within NatWest, featuring:
- Loan Amount: £296,101 for Part 1 of the mortgage.
- Interest Rate: A five-year fixed rate, providing financial stability and predictable monthly payments.
- Term Length: 21 years and seven months, ensuring alignment with the applicant’s retirement goals.
- No ERCs on Part 2: By staying with NatWest, the applicant avoided penalties and additional costs.
- Reduced Product Fee: The £395 fee further enhanced the affordability of the transfer.
Outcome
The product transfer was completed successfully, securing a competitive five-year fixed rate for Part 1 of the mortgage. The applicant gained the payment stability they sought while avoiding unnecessary fees or penalties. By preserving the original mortgage term, they remained on track to fully repay the loan by their desired timeline.
Key Takeaways
This case underscores the benefits of tailored mortgage solutions, particularly in scenarios involving multiple loan parts and potential ERCs. By leveraging an existing relationship with the lender, we facilitated a seamless product transfer that aligned with the applicant’s financial goals.
If you’re nearing the end of a fixed rate and need expert guidance to explore your options, contact us today to secure a solution tailored to your needs.
