Should I port my fixed 5.58% fixed rate or just pay the charges?

glock339

Hi, I am selling my house due to splitting up with my partner and have just accepted an offer from a cash buyer. The only downer is I took out a 5 year fixed rate mortgage at 5.58% with Abbey in April 2008, which means we will be charged around £6400 to be released.

I have been told by Abbey that I could keep on part of the mortgage, which would reduce the charges. For example if I took on half of our £160,000 mortgage at £80,000 to by my self a new property then the charges will be reduced to aprox half at £3200. Obviously this saving would then have to be split between me and the ex, which would mean I’d be saving around £1,600.

On the one hand I hear that interest rates are dropping but then I also hear the aren’t really being passed on yet, the banks still aren’t confident about lending, people needing bigger deposits etc etc.

So my question is it worth me trying to quickly trying to find somewhere to make the saving (I do have my eye on a couple of places) or is it better to just take the charges on the chin and look for a new mortgage deal?

Cheers.
Gary.

silvercar

Find out the gap you are allowed between selling and buying. Some lenders will allow 6 months. You then pay the charges when you sell and are refunded when you buy.

Do check that the new mortgage doesn't have to be in the same names as the former.

dunstonh

Its quite simple. You just have to cost the options over the remaining period and see which is most cost effective. I suspect keeping the rate will be. Plus, a 5.58% rate is very good for fix.

Don't fall into the trap thinking that recent interest rate drops are going to be like that long term. The minute the economy goes into positive territory you will see interest rates rise again as inflation will be the key driver then.

glock339

Thanks for the replies!:beer:

Abbey told me they usually allow 3 months to buy a new property, but this can be extended where needed and I could just take it on under my name. I'm not exactly sure if you pay the charges first and then get a refund, I'll have to ring em again and find out.