Mortgage Case Study
David Walgrave considered himself a keen personal financier and invested a lot of time and effort into his hobby, and yet he had neglected to see to his biggest commitment – his mortgage.
Following the recommendation of a work colleague, David made an appointment to see Cambourne. His main reason for remortgaging was to save money each month, and hopefully use these savings to help repay the mortgage capital. He currently had an interest-only mortgage for £120,000 supported by an endowment policy that didn’t appear to be on target to repay the full amount outstanding at the end of the mortgage term. His mortgage was with Alliance & Leicester and he was paying their standard variable rate of 7.09% that meant monthly interest payments of £709. David also had concerns about the stability of the Bank of England Base Rate and didn’t feel that he could afford another increase in the near future.
Having researched the marketplace and analysed David’s personal circumstances, Cambourne recommended a Cheltenham & Gloucester 2 year Fixed rate mortgage at 5.25%. This deal was lower than David’s current rate by 1.84%. The deal also came with a free valuation, no arrangement fee and all the basic legal work paid for by C&G. As the rate is fixed David would not see any increase within 2 years even if the Bank Base Rate increased. At the end of the 2 years David could look for another deal with no penalties to pay.
By making this switch David has saved a massive £184 a month on his mortgage costs. The Cheltenham & Gloucester deal allows for overpayments to be made so David is using the saving to make regular overpayments which will help to cover any shortfall in the endowment policies - over two years this will reduce his mortgage by over £4500.
