What should I do?

resi

Dear all
first of all, Happy New Year!
i wondering if you could give me your view on my mortgage situation?

in December 2007 I remortage my cottage at a 5yrs fixed rate with the cooperative bank. since then the interest rates have dropped and dropped.

in August 2008 i sold my cottage and moved to a smaller and cheaper place and transferred the mortgage across as the redemption fee was huge. as I downsized, I have also paid the maximum allowed overpayment for the year in to the capital fund.

now I can do another maximum repayment again as it is a new calendar year.

what i am wondering is; should i re-pay the redemption fee and look for a lower interest fee mortgage or should i stay where i am for the remaining period?

the monthly payment is short of £400 and that is no problem to pay so is not an issue of being able to affort the payment is more to do: I am lining the cooperative bank pockets ???

your view is highly welcome!

thanks, Resi

beecher

As you are only 1 year into a 5 year deal, your Early Repayment Charge is likely to be quite substantial. Since you're only paying £400/month your mortgage must be fairly low so it is unlikely to make sense to come out of your deal. If you post details of how much your ERC is someone can work it out for you.

I don't understand why you think you're lining the Coop's pockets though - you were obviously happy with the deal at the time and presumably had the option of a tracker but chose to go for a fixed instead.

CLAPTON

maybe yes or maybe no, depending upon how much the redemption penalty is and what sort of interest rate you could get instead and what the fees would be ...

resi

hi again!

I am not sure what is the ERC that Beecher mentions, but here are few details about my mortage:

Loan amount: £50,042 repayment mortage
monthly repyamnet: £370
House pucrhase price: £117,000
term remaining 19yrs 4 months
fixed rate til 31/10/2012
initial rate payable 6.19%
overall cost for comparison: 6.9% APR

is that what was required? I am a bit unsure about all this!
let me know if anything else is needed!

look forward to hear from you

many thanks, Resi

sammyjammy

ERC means early repayment charge, this is the fee you will be charged if you redeem the mortgage, its important in working out if its worthwhile for you to redeem or not.

Trying_to_be_good

Resi

the other bit of information needed is the Early Repayment Charge (ERC) taht applies - this may be a percentage that reduces each year into the fixed rate deal, e.g. 5% to 31 Dec 08, 4% to 31 Dec 09 etc.

Have you asked if you could shorten the term of the mortgage? If you dropped the term remaining, the monthly payments would go up and you would be overpaying (although this would be a permanent change).

resi

ah! ok, the paperwork says:
repaid with/ charge basis
1 year/ 5% of the amount repaid plus fees
2/ 4%
3/ 3%
4/2%
5/1%

in the small print is says exit fee is £0

hope this helps!
Resi