Is it worth me remortgaging?

Hi, I'm currently on a 5 year fix of 4.79% which ends 31/10/2019. The ERC is currently 4%, but decreases by 1% every year on the 31/10. The standard monthly payment is £259.69 and I also OP another £100 each month.
The last valuation was £62500 and the remaining balance is £47999, however I would pay the extra to get the LTV to 75%.

I am trying to work out if it is worth remortgaging. My current provider can do fee free 2yr fix for 2.73% and a 5yr fix for around 3%. Ideally I would like to find something for less, but as a worse case scenario would this still be worth doing?
I would still keep my payments at £359.69 so more of it would be an OP than the current £100. Does this help make it worthwhile?
Would I be better off waiting until the ERC goes down to 3%?

If you need any more info let me know, thanks.
MFW - Original balance 28/08/2014 £52850
Original MF date: 2049:eek: Aiming for: 2025 Current MFD: 2030
Balance 27/07/2016 £49990
Balance 08/07/2017 £47999
Balance 30/07/2018 £44500
Balance 01/08/2019 £40700
Balance 03/09/2020 £37619
Balance 30/09/2021 £33983

Comments

  • getmore4less
    getmore4less Posts: 46,882
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    add the fees make the payments the same and see whats left at the key dates. 31 OCt 17(3month) and 31Oct 19(27month)

    first comparison is til ERC drops to 3%
    Erc now @4%, £1920

    £47,999 @ 4.79% £360pm £47,392 + ERC@3% £48,814
    £49,919 @ 2.73% £360pm £49,178

    not worth switching now £300 down in 3 months

    in 3 months your comparison over the next 2 years becomes.

    £47,392 @ 4.79% £360pm £43,098
    £48,814 @ 2.73% £360pm £42,680
  • bubblycrazy
    bubblycrazy Posts: 288
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    Thanks, so it would be worth it in 3 months time but would only save £300?
    What about the fact that the current payment overpays by £100 each month but the newer payment would be a £175 overpayment.
    Would the second option not knock more years off the mortgage, as more of the money is coming off the capital?
    I would pay the ERC straight away and not add it to the mortgage.
    MFW - Original balance 28/08/2014 £52850
    Original MF date: 2049:eek: Aiming for: 2025 Current MFD: 2030
    Balance 27/07/2016 £49990
    Balance 08/07/2017 £47999
    Balance 30/07/2018 £44500
    Balance 01/08/2019 £40700
    Balance 03/09/2020 £37619
    Balance 30/09/2021 £33983
  • getmore4less
    getmore4less Posts: 46,882
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    Paying the fee up front makes a tiny difference.

    If you wait till the ERC drops to 3% you save about £400 over the next 2 years.
  • Boredatwrork
    Boredatwrork Posts: 2,068 Forumite
    edited 13 July 2017 at 3:35PM
    "however I would pay the extra to get the LTV to 75%.
    Why dont you pay the extra now and anything else you can afford. The quicker its in the more you save overall.

    Once that payment is made and cleared call you bank ask what they takes your LTV to and your current balance (many banks can tell you this straight over the phone), then see where you are.

    You maybe closer to 65% or 60% than you think which opens up the best deals (some which are fee free) and it may just be worth holding on until then.

    Use a Mortgage calculator to work out when you will roughly hit the right LTV, if you have a smart phone theres a really app one called Karl's mortgage calculator for free, and does the number crunching for you.

    My current provider can do fee free 2yr fix for 2.73% and a 5yr fix for around 3%. Ideally I would like to find something for less
    Here you go..

    Yorkshire building society are currently doing:

    85% all fee free-
    2 year 2.14%
    3 year 2.30%
    5 year 2.63%

    75% all fee free-

    2 year 1.82%
    3 year 1.99%
    5 year 2.39%

    They also do a 65% for the best deals if you can get there.
  • getmore4less
    getmore4less Posts: 46,882
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    Why dont you pay the extra now and anything else you can afford. The quicker its in the more you save overall

    paying 4% now rather than 3% in 3months needs a rate of arount 1.2% to break even over the 3 months.
  • Boredatwrork
    Boredatwrork Posts: 2,068 Forumite
    paying 4% now rather than 3% in 3months needs a rate of arount 1.2% to break even over the 3 months.

    I was talking about overpayments, the original poster said they would make up the difference, they may have some cash behind the sofa, that could be put to good use :)
  • bubblycrazy
    bubblycrazy Posts: 288
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    edited 15 July 2017 at 1:17PM
    Thanks for the responses.
    Why dont you pay the extra now and anything else you can afford. The quicker its in the more you save overall.

    Yorkshire building society are currently doing:

    85% all fee free-
    2 year 2.14%
    3 year 2.30%
    5 year 2.63%

    75% all fee free-

    2 year 1.82%
    3 year 1.99%
    5 year 2.39%
    I can't really afford to get it to 75% right now, that was taking into account the next 3 months of normal payments as well.
    I also don't know if i will pass the affordability tests to move to a new lender, I may have to take what my current lender offers.
    What about the fact that the current payment overpays by £100 each month but the newer payment would be a £175 overpayment.
    Would the second option not knock more years off the mortgage, as more of the money is coming off the capital?
    Am I wrong looking at it this way? If I put the figures into an overpayment calculator, it looks as though I pay off £2500 more this way.
    £46875 (balance for 75% LTV) at £260pm plus £100 OP, balance in 2 years £43210
    £46875 at £185 plus £175 OP, balance in 2 years £40699
    Minus the ERC, I would have saved £1100
    That is keeping my term the same with 32 years remaining.
    MFW - Original balance 28/08/2014 £52850
    Original MF date: 2049:eek: Aiming for: 2025 Current MFD: 2030
    Balance 27/07/2016 £49990
    Balance 08/07/2017 £47999
    Balance 30/07/2018 £44500
    Balance 01/08/2019 £40700
    Balance 03/09/2020 £37619
    Balance 30/09/2021 £33983
  • getmore4less
    getmore4less Posts: 46,882
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    Thanks for the responses.


    I can't really afford to get it to 75% right now, that was taking into account the next 3 months of normal payments as well.
    I also don't know if i will pass the affordability tests to move to a new lender, I may have to take what my current lender offers.


    Am I wrong looking at it this way? If I put the figures into an overpayment calculator, it looks as though I pay off £2500 more this way.
    £46875 (balance for 75% LTV) at £260pm plus £100 OP, balance in 2 years £43210
    £46875 at £185 plus £175 OP, balance in 2 years £40699

    Minus the ERC, I would have saved £1100
    That is keeping my term the same with 32 years remaining.

    If the total payment is the same and the rate is the same the end result should be the same.
  • bubblycrazy
    bubblycrazy Posts: 288
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    If the total payment is the same and the rate is the same the end result should be the same.
    The rate isn't the same. Sorry should have put the first calculation was at the original 4.79%, the second calculation is for 2.73%
    MFW - Original balance 28/08/2014 £52850
    Original MF date: 2049:eek: Aiming for: 2025 Current MFD: 2030
    Balance 27/07/2016 £49990
    Balance 08/07/2017 £47999
    Balance 30/07/2018 £44500
    Balance 01/08/2019 £40700
    Balance 03/09/2020 £37619
    Balance 30/09/2021 £33983
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