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    • clairecymru
    • By clairecymru 16th Oct 16, 11:46 PM
    • 476Posts
    • 2,645Thanks
    Should I pay ERC to get a better rate?
    • #1
    • 16th Oct 16, 11:46 PM
    Should I pay ERC to get a better rate? 16th Oct 16 at 11:46 PM
    I have 10 months remaining in my fixed rate mortgage. I took out a 95% mortgage over 29 years with an interest rate of 5.01%. My ERC is £2,500.

    Based on current property sales nearby my home is worth £100,000. I owe £78,000 on the mortgage.

    Looking a current mortgage rates for 80% LTV I could knock £100 a month off my mortgage or pay what I am currently paying but knock 7 years off the term.

    Am I better off paying ERC to get better rate or just sticking out for another 10 months until my fixed term ends.
    Hoping and Praying for that ITV win!
Page 1
    • Thrugelmir
    • By Thrugelmir 16th Oct 16, 11:48 PM
    • 56,733 Posts
    • 50,104 Thanks
    • #2
    • 16th Oct 16, 11:48 PM
    • #2
    • 16th Oct 16, 11:48 PM
    10 months saving at £100 = £1,000.

    ERC = £2,500 Plus costs of remortgaging.

    On the face of it no saving. If you can afford to overpay the mortgage by whatever you can. That will save you money and improve your LTV quicker.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • getmore4less
    • By getmore4less 17th Oct 16, 6:24 AM
    • 31,168 Posts
    • 18,681 Thanks
    • #3
    • 17th Oct 16, 6:24 AM
    • #3
    • 17th Oct 16, 6:24 AM
    Add the fees make the payment the same and see whats left in 10 months

    £78k 5.01% lets say you are paying around £450pm now.

    adding £2500 you need a rate of 1.1% or better to break even in 10 months.
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