Fixed Mortgage to Tracker...

I have a mortgage with the Halifax and in Feb 2007 got most of it on a five year fixed at 5.59%, though I also have a small part on a Tracker...rate plus 1.39%.

I must admit to feeling quite good about it for most of the time I've had it until the rates started tumbling down. Now it doesn't look so good.

Obviously there are penalties attached to withdrawing early, but there is also a "discretionary" allowance to pay off upto 10% of the mortgage in any one year, without penalties.

Now my penalties for early repayment are set at 4% prior to end of this Feb and 3% for the next year.

I've calculate that if the bank lends me the money to pay 10% back without penalty on the fixed rate mortgage in January, then does the same again in March (which is a "new year" as far as my mortgage goes) and then lends me the money to pay the rest back, including the 3% penalty, and puts it all onto the Tracker mortgage, I would save myself over £150 a month.

What would be the chances of the Halifax agreeing to do this, or of getting another bank to do it?

Comments

  • hearts
    hearts Posts: 1,191 Forumite
    I may be misunderstanding this...but, if the bank lend you money to pay back 10% then surely you will be paying interest at a much higher rate on this 10% you have borrowed. This is without even thinking about the unlikeyness of them doing this.
    I don't know what trackers are out there as new products, but I would assume that the banks in setting them, have taken into consideration the likelyhood of another rate fall soon. So they may not be as good as you expect.
    Trackers were great if you were lucky to be on one before now. I don't think they will be so good now switching to one.
  • Hi Hearts

    The thing is I already have a small part of my mortgage on a tracker base plus 1.39%. So what I want to do is essentially move all my mortgage from the fixed rate to that one...so I don't really need anything "new".
  • _Andy_
    _Andy_ Posts: 11,150 Forumite
    You won't be able to transfer the rest to the existing tracker rate. It would only be whatever tracker rates the lender currently offers.
    Given that you have a decent 5 year fix rate I'd seriously doubt this would be a good idea longer term, considering the ERCs etc.
  • dimbo61
    dimbo61 Posts: 13,710
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    If you want to reduce the interest you are now paying on your mortgage then overpay your mortgage payment by 10% each month ! EASY
    Check the balance at the start of the year, work out 10% and payoff in one lump sum or pay extra each month.
    Doing this for the next 3 years and your mortgage will be near as damm 50% of your start balance.
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