Advice needed please - remortgage or not?

figgyroo

I remortgaged in May 2008 - it was for £99k on a 3yr stepped fixed. 3.99% for the first year, and 5.99% for the remaining two years. The total term was 37years. The redemption penalty on my current mortgage is 3%. At the time an estate agent valued my house at £200k whereas Halifax valued it at £181k. I am considering arranging another mortgage in May 2009 when the rate increases to 5.99% for the following reasons:-

I would like to reduce the term of the mortgage to something in the region of 25years - at the current fixed rates available the monthly payment will be around the same as what I will be paying in May on a 37 year mortgage.

I would like to fix for a period of 5-10 years as I would like the stability of knowing my payments for that length of time.

I don't want to risk rates rising sharply in the 2 years when the fixed period ends and I wouldn't be able to get a rate that I could get now.

Halifax are currently valuing my house in the region of £155k - quite a drop. Obviously as my LTV increases, rates get less competitive. Who knows how much my LTV will be if I leave the mortgage to run for the 2 years.

Could anyone offer me any advice on whether this seems to be a sensible course of action, obviously taking into account the redemption penalty?

Thanks.

.

dimbo61

So you are going to pay £3,000 erc
About £1000 fee for a new 5/10 year deal at 4.85/4.99% plus all the other costs to get a new mortgage .
Not worth it
If you have got £4/5000 spare then overpay the mortgage for the next 2 years ( check with lender )
Even with the latest valuation from Halifax you still have a LTV of 66% so you already get most good deals.
You have security of a fix for 2 more years so OVERPAY and OVERPAY some more. Simple.

beecher

I agree with dimbo. Stick with what you have and overpay everything you can. There's no way you can justify an ERC of £3,000 plus an arrangement fee.

figgyroo

Thanks for your input. Just think I'll kick myself in 2 years time when I come to remortgage and the rates are sky high...