To remortgage or not!

thenap80

Hi
Thankyou for reading this post.
I am currently on a three year fixed deal with Abbey at a rate of 5.72%. This began in June 2008 and lasts for three years. The remainder on the mortgage at the start of the term was about £88,000. Paying it off over a 12 year term, although I like to pay a lump sum overpayment nowa and again (about £8000 a year.

Please, does anyone know if it is worth remortgaging early with another lender given some of the low rates I am seeing (3.89% I saw advertised somewhere). There is an exit fee (or whatever it is called) of about 2,500.

Given these values, does anyone with a financial mind know whether it would be a big saving for me to change lenders now?

Many Thanks
Barry

beecher

You need to find out what deals you're actually eligible for rather than plucking 3.89% out of the air. You also have to factor in any arrangement fee there may be - and many are hefty. If you work out the figures and find you're gaining more than £2,500 plus arrangement fee over 2 and a half years then it is worth it. With a mortgage of £88,000 it is very unlikely that the sums will add up.

As a rough calculation you're paying £846.05/month at your present rate, and if you find a deal at 3.89%, you'd be paying £765.77. Over 2 and a half years you'd gain £2408 - ie not enough to make it worth while, even before factoring in an arrangement fee.