Avoiding Mortgage penalties
Discussion
I've got 18 months or so of a fixed rate left to run. It's looking like rates are only going one way and I'd like to try for a decent rate now. The penalty for paying off the mortgage is around £2000. I've read that if you pay off all but a few hundred quid, it's possible to escape the penalty charges.
True or a load of bunkum? Would having a mortgage of £200 affect getting another one. (Re-mortgage)
True or a load of bunkum? Would having a mortgage of £200 affect getting another one. (Re-mortgage)
My current lender hasn't good a decent deals. I keep jumping one way and then the other. Decisions, decisions Elroy Blue said:
I've got 18 months or so of a fixed rate left to run. It's looking like rates are only going one way and I'd like to try for a decent rate now. The penalty for paying off the mortgage is around £2000. I've read that if you pay off all but a few hundred quid, it's possible to escape the penalty charges.
True or a load of bunkum? Would having a mortgage of £200 affect getting another one. (Re-mortgage)
Rates have been cut this week. SOem are hinting the lenders arent done yet.True or a load of bunkum? Would having a mortgage of £200 affect getting another one. (Re-mortgage)
Your current mortgage lender has first charge on your house. (i.e if you dont pay the mortgage they get first bite of the value when its repo'd.)
Mortgage lenders don't like being second charge, so if you want to get the current best rates you'll need to redeem loan one, which will mean paying your charges.
Well, I think I'm going to take the plunge. Getting out of my current fixed rate (with 18 months left to run) wull cost a touch over £2000.
I've found another fixed rate that is £80/month cheaper with only a £99 fee. The maths says I'l get the £2000 back in two years and have another three years of a fairly low rate. My colleagues wife (who is a succesful financial type person) seems pretty convinced that rates will be on the up by the time my current rate runs out and decent mortgage deals will be harder to find. I hope she's right! (While I'm 99% sure it's the right thing to do, I haven't made myself sign on the dotted line yet. )
I've found another fixed rate that is £80/month cheaper with only a £99 fee. The maths says I'l get the £2000 back in two years and have another three years of a fairly low rate. My colleagues wife (who is a succesful financial type person) seems pretty convinced that rates will be on the up by the time my current rate runs out and decent mortgage deals will be harder to find. I hope she's right! (While I'm 99% sure it's the right thing to do, I haven't made myself sign on the dotted line yet. )
Edited by Elroy Blue on Wednesday 22 September 13:22
Just checked my endowments. (Had two letters warning of a shortfall recently) Worth £30 grand at the moment, so I've decided to cash 'em in, pay that chunk off the mortgage and switch to a repayment. It'll save me £30 grand in interest. Seems a no brainer. I'm sure there is a catch somewhere
Elroy Blue said:
Just checked my endowments. (Had two letters warning of a shortfall recently) Worth £30 grand at the moment, so I've decided to cash 'em in, pay that chunk off the mortgage and switch to a repayment. It'll save me £30 grand in interest. Seems a no brainer. I'm sure there is a catch somewhere
You won't cash them in for full value though.
king unlikely. My previous lender cut their nose off to spite their face so I went elsewhere. "Happily" paid then the fee and went elsewhere.I'm bound to get a pasting for this, but, I had about 31k remaining on a fix at 5.89%, which annoyed me as i was getting feck all for a slightly larger amount that i had in bank (poor choice of account/apathetic to poor returns from isa's etc).
Had been overpaying for years at the max 500 p/m to get here, in the end just swallowed the 3% penalty.
Came to 900 odd quids, but its over! No more mortgage!!! I figure i'll have saved it back in interest in no time flat anyway.
EDIT: I'm with you completely on the endowment cash in, I had a Standard Like one which barely washed its face in 14 yrs, punted it for fairly good money and took it off the capital. What you ' could earn if we don't spend it first" against what you definately no longer owe, and won't be paying interst on for another load of years.
No contest.
But don't spend it, must come off the mortgage the day you get it!
Had been overpaying for years at the max 500 p/m to get here, in the end just swallowed the 3% penalty.
Came to 900 odd quids, but its over! No more mortgage!!! I figure i'll have saved it back in interest in no time flat anyway.
EDIT: I'm with you completely on the endowment cash in, I had a Standard Like one which barely washed its face in 14 yrs, punted it for fairly good money and took it off the capital. What you ' could earn if we don't spend it first" against what you definately no longer owe, and won't be paying interst on for another load of years.
No contest.
But don't spend it, must come off the mortgage the day you get it!
Edited by fridgedoctor on Wednesday 9th March 17:39
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