Should we change mortgage now?
Discussion
I'm not sure on the exit fees yet, but I'm wondering if there would be a way to calculate how much we'd 'save' by changing mortgage now and paying ERCs.
We have 1.5 years left of our fixed 5 year rate with Halifax, and it's 5.99%.
We have money waiting to go into the mortgage, so think we could be doing better potentially by taking the ERC hit and moving on. We have put in 10k the other day, and have another 30k waiting to go in, but can't put it in yet because of ERC.
This would take our mortgage down to £80k on a £130k(ish) house, so we'd get some better rates on the mortgage because of that, I'd guess?
Sorry this may come across as stupid, but want to do the best I can financially to set us up for the future.
We have 1.5 years left of our fixed 5 year rate with Halifax, and it's 5.99%.
We have money waiting to go into the mortgage, so think we could be doing better potentially by taking the ERC hit and moving on. We have put in 10k the other day, and have another 30k waiting to go in, but can't put it in yet because of ERC.
This would take our mortgage down to £80k on a £130k(ish) house, so we'd get some better rates on the mortgage because of that, I'd guess?
Sorry this may come across as stupid, but want to do the best I can financially to set us up for the future.
Pulse - you will need to look at your own circumstances of course but I did something very similar to you 6 months ago. I was on the same fixed Halifax deal with same ERC and similar numbers in terms of the mortgage you would be going down to. I calculated that by moving to the HSBC 1.79% above base rate tracker I would recoup the ERC in 6 months provided the BOE rate didn't move. Anything after that and I was better off by getting out of my old Halifax deal early.
I did this in November. Cashed in an endowment, switched to repayment and got a lower 5 year fixed rate (only 0.5 less).
However, by using the cash from the endowment and paying an extra £120/month, I've reduced my term from 16 to 6 years and will save £47000 in interest. The exit fee was £1300. A no brainer
However, by using the cash from the endowment and paying an extra £120/month, I've reduced my term from 16 to 6 years and will save £47000 in interest. The exit fee was £1300. A no brainer
Am in the process of paying a £2,000 ERC with HBOS at 4.99%, so that I can go on a far superior product with HSBC.
Valuation is done online FOC and there are no product fees. Legal fees are also FOC.
Go onto their site and punch in your current situation into their calculator and it will give you a direct comparison.
Choose the 60% LTV Tracker as this will reflect your new position after your lump sum payment. This is not a fixed product so you can make overpayments as you see fit. Rates would need to rise enormously for the tracker to reach your current pay rate. Even then, you can move onto a fix at leisure as you are not tied in.
This does not constitute advice - it's simply what I am doing
Valuation is done online FOC and there are no product fees. Legal fees are also FOC.
Go onto their site and punch in your current situation into their calculator and it will give you a direct comparison.
Choose the 60% LTV Tracker as this will reflect your new position after your lump sum payment. This is not a fixed product so you can make overpayments as you see fit. Rates would need to rise enormously for the tracker to reach your current pay rate. Even then, you can move onto a fix at leisure as you are not tied in.
This does not constitute advice - it's simply what I am doing
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