Mortgage Question

[SteveScooby]

A bit of advice please if someone could assist....

We bought a house 12 months ago for £177k, borrowing £157k over 28 years. Interest rate is 4.15% fixed for 2 years. Currently owe around £153k, ERC if I paid it off now would be approx £1500.

Looking on Money Supermarket I can get a new deal over 20 years for the same monthly repayment as I am paying now (27 years left) on current deal.

Is it worth taking out a new deal now or should I leave it until my fixed rate ends in 12 months?

Thanks

Edited by SteveScooby on Monday 12th May 22:52

[Sarnie]

1% ERC sounds too low, have you confirmed that with the lender?

The shorter term will see you paying more capital and less interest which is a good thing....just don't be tempted to take it over the same 27 year term.....

[SteveScooby]

Sarnie said:

1% ERC sounds too low, have you confirmed that with the lender?

The shorter term will see you paying more capital and less interest which is a good thing....just don't be tempted to take it over the same 27 year term.....

Thanks for the reply, ERC is definitely 1% per year remaining, and there is 1 year left (HSBC)

The only reason I'm considering remortgaging is to reduce the term, I'm comfortable with the current repayments and have been paying a bit extra most months

Edited by SteveScooby on Monday 12th May 22:51

[Sarnie]

SteveScooby said:

Thanks for the reply, ERC is defibitely 1% per year remaining, and there is 1 year left (HSBC)

The only reason I'm considering remortgaging is to reduce the term, I'm comfortable with the current repayments and have been paying a bit extra most months

And what product/lender are you considering moving to? I assume it's a lower LTV to make the difference?

[SteveScooby]

Tesco have a tracker at 2.45%. My question is whether to do it now and spend £1500 on ERC, or wait 12 months and not have to.

[Sarnie]

SteveScooby said:

Tesco have a tracker at 2.45%. My question is whether to do it now and spend £1500 on ERC, or wait 12 months and not have to.

The product may not be around in 12 months, but then it's going to cost £2,500+ in total to change now, including Tesco's fees.

Changing from a fixed rate to a tracker carries the obvious risks of rates going up. If you don't think they will or you could afford it if they did, then it might be worth while.....

Tough call!

[SteveScooby]

Sarnie said:

The product may not be around in 12 months, but then it's going to cost £2,500+ in total to change now, including Tesco's fees.

Changing from a fixed rate to a tracker carries the obvious risks of rates going up. If you don't think they will or you could afford it if they did, then it might be worth while.....

Tough call!

Thanks a lot, will give it some more thought.

[eliot]

Give hsbc a call? Ive just remortgaged into hsbc to save a considerble amount per month on one of thier lifetime trackers (1.5% over base)

[Sarnie]

eliot said:

Give hsbc a call? Ive just remortgaged into hsbc to save a considerble amount per month on one of thier lifetime trackers (1.5% over base)

Is your LTV 85%?

[eliot]

No - but hsbc have mortgages available for 85% ltv and any sensible person would start by discussing with their current provider to see if a better deal is possible.

[pacoryan]

Beware also of reducing the term to fit your current affordability. Why not continue making overpayments, effectively reducing the term? Once the mortgage is paid off it is paid off, if your mortgage term is 27 yrs but you repay in 23, great!

If you restrict yourself to 23 yrs now you also commit yourself to the higher monthly repayments. It is very easy to reduce a mortgage term, but harder to extend it when you might need to, i.e. if in a financial squeeze.

And jumping from a Fixed rate to a Tracker now is also of debatable merit given the fixed rates currently available.