pay early redemption or not??

kazzys51

Hi all im new to the site and would appreciate any advice on this ..... my fxd rt is up on sept 09(6.29%) at the mo it's got £59000 with nationwide who allow u to overpay £500 a mth(inc £490 my original payment) which ive been doing for a yr now with the way the markets going im tempted to buy myself out of this deal now which would cost £650 plus id need to buy a new deal with whatever that costs currently £599 if i stay with nationwide this means i cud arrange another 5 yr fxd arrange it over 7 years and try and still overpay and hopefully id have it done in 5 years does this sound nuts or am i better sitting tight til nxt sept? thanks kazzys

JorgAlBear

Make you ro verpayments as you are and DO NOT pay an early repayment charge, it is just undoing some of the good work you have started. WHo knows how the market will be next Spetember, but things are settling down a bit, so sit tight.

ailuro2

Agreed- none of us know which was the rates are going to go, but we do know lenders aren't offering good deals on a plate at the moment.

Any money you can afford to overpay over and above the £500 a month, put it into a higher rate savings account for now, but then overpay it when you come to the end of your deal, because you should be able to do it without penalty then?

Paying £650 get out of deal fee, then another £599 would be equivalent to an extra £20 a month on your mortgage every month for the next five years, not including interest lost on the money....

kazzys51

Hi guys thanks for replying, ive just found out that nationwide are giving exsisting cust a 6.18% fxd rate 5 yrs free so its just the £600 odd early redeption fee with making this a fxd rate for 5 years overpaying as i am it would be a bit cheaper than the 6.29% deal im already in saving £330 over 5 yrs so in actual fact that means early rede is only costing £300 which is not that much to pay for peace of mind in it being done in 5 yrs the market my go down a bit now but by nxt sept it may make up for lost time who knows what do ewes think??? kazzys

DFW2

Make sure you will still be able to overpay without incurring penalties under your new contract as some mtge co's won't let you do this or fix it at a max overpayment percentage allowed per month.

JonnyBravo

kazzys51 wrote: »

Hi guys thanks for replying, ive just found out that nationwide are giving exsisting cust a 6.18% fxd rate 5 yrs free so its just the £600 odd early redeption fee with making this a fxd rate for 5 years overpaying as i am it would be a bit cheaper than the 6.29% deal im already in saving £330 over 5 yrs so in actual fact that means early rede is only costing £300 which is not that much to pay for peace of mind in it being done in 5 yrs the market my go down a bit now but by nxt sept it may make up for lost time who knows what do ewes think??? kazzys

I'm not sure your sums are strictly what you should be looking at.
You should be looking at the saving 6.29%-6.18% makes you, til your rate ends (ie Sept 09) NOT the saving it makes for the full 5 years. You might end up with a better rate than 6.18% in Sept 09 which makes your calculation meaningless.

I make it closer to £70. Therefore the more relevant "cost" figure you should be considering is more like £560.


Even if you do want to work off £300, only you know whether that £300 is "good value" for your peace of mind.

Personally, as has been said by others, I'd sit it out. Interest rates MAY be lower by then. £300 is the majority of one months overpayment. £560 is more than one months overpayment.

kazzys51

hi guys thanks for all this gr8 advice one thing i should have mentioned im going to use 10000 of my savings to reduce the total as well so thats going to bring it down might b a bit more if i can find anything else to sell thats not screwed down!! when is the bank of eng due to make its decision on wether the rate will change??