Change from fixed rate or bend over and take it?

MJS996

Hi

Writing this will probably be enough for me to answer my questions myself, but always welcome other opinions..

I have a mortgage with RBS which is in 2 parts (due to historical time of move, increasing mortgage etc).

Part 1 is just under 85k and is on SVR (currently 4.44%). It therefore has no tie-ins.
Part 2 is just over 150k and is fixed for 2 years at 5.19%. The 2 year fix finishes 30/06/09, and there is a 1% (of the 150k) penalty for early redemption.

Equity in the house is around 115k.

My plan has always been to bring the 2 mortgage parts back together as one, hence why part 1 is on SVR until part 2 is free to move.

Is there anything to be gained by paying the 1% (£1500) early redemption penalty to be able to move the whole mortgage now? It seems to me I have 6 (maybe 7) montly payments to make on this deal, so would really need to save £1500 over 6 months or £300 per month to make it worthwhile.

Does this sound possible?

I'm currently over-paying each month as well (on the larger, fixed part, and within the 10% per year allowable).

Any thoughts/advise would be welcome

Thanks
Martin

Gorgeous_George

Without doing the number crunching, I think I would stick with what you have and move only when there is no penalty or ERC.

I don't know which way rates are going. I'm split 60/40 that the next move in rates will be down/up.

I think that fixed rates may fall a little further IF BofE base rates remain stable for 6 months or so at the current level +/- 0.5%. Somewhere near 4% may be the absolute best.

In a couple of months you will be able to start actively seeking a new deal. This may well be the best time ever to grab a ficed rate. Your timing looks good to me.

GG