Fixed mortgage - 4yrs remaining - switch?

drtinkle

I have a £145,000 mortgage and am am fixed for four years in my Abbey mortgage at 5.58% which costs £940.00 / month. With the early repayment charge being £ 5,700.00 and the interest rates being so low would it make sense to pay the penalty and switch to a lower interest repayment mortgage?
Or, should I switch my wife for another version to avoid anything like this happening again?

PeteHi

Im the same as you, I signed up last year for a 5 year fix @ 5.95% and they want about £8k for me to switch to a variable/tracker.

Hindsight is a wonderful thing, but can you be sure that in say 2 years time rates won't be higher than the 5.58% you are currently paying?

Whilst it would be great reducing my monthly payment by about 60% I'm guessing like me, you fixed for a reason?

luluoliver

I am also in the same situation. Just signed up in October for two years fixed at 5.68%, now I'm not sure what to do. Would be £2k to get out of my deal, but at the same time I would be worried that in a few months the rates would soar. It's killing me though that my friends are all currently paying about 1.9% and are saving quite a substantial amount each month. I'm also wanting to take a payment holiday for about 7mths due to going on maternity leave, and it would mean the interest accruing over that time at 5.68%. i tried to speak to a Nationwide mortgage advisor about what would be the best option, but she was reluctant to make me an appt and tried to discuss it over the phone, and to be honest she was no use at all!!
I really would appreciate some advice from anyone who has been thinking the same?? Can't seem to get worthwhile advice from anywhere local!
I couldn't afford to pay the £2k fee up front so would be adding it onto my mortgage, so is that just making it more expensive in the long run??

paulwest101

i may sound dense here but the best trackers i can find seem to be 2-3% over baserate so it only takes a few rises and you will be over what you are paying now so its a real risk have seem some 10 year fixed rate deals at 4.7 ish but you do need to only be borrowing 60% of your house value

the payment break idea is sound as we are in a similer situation but with only 3 months unpaid at the end of the 12 but skipton refuse to give us a break

beecher

luluoliver wrote: »

It's killing me though that my friends are all currently paying about 1.9% and are saving quite a substantial amount each month.

You wouldn't get anywhere near that deal now so you're not comparing like with like. Fixed rates are still around 5% and trackers have a high margin. 5.68% isn't that bad a rate.

Cannon_Fodder

A £5K to £8K ERC is going to effectively add 1% to 2% onto any good rate you may find, over the course of 4 years of the new deal...

dimbo61

to all three of you who have fixed for 2/4/5 years what are you getting so worked up about!
As others have said most 5 year fixes are currently 4.69/4.99%
Tracker for new customers are 2.49/2.99% above BOE
you have security for the length of your fix
If you have money spare then overpay

leopardo_2

Dimbo - you love your long term fixes don't you! Thanks for your advice the other day about looking for a longer mortgage terms. I did a cost for comparison and its actually cheaper to go on slightly higher interest 5 year term fix because of avoiding paying arrangement fees every two years. So I'm on the look out for the best 5 year fixes now with 80% LTV. Cheers!

Robert_Sterling_3

PeteHi wrote: »

Hindsight is a wonderful thing, but can you be sure that in say 2 years time rates won't be higher than the 5.58% you are currently paying?

No you can not be sure.

dimbo61

leopardo wrote: »

Dimbo - you love your long term fixes don't you!
3 years ago I took out a 5 year fix at 4.74%
After the 5 years it goes onto a BOE tracker + 0.75%
So I could be on 1.75% if I had taken a 3 year deal and not 5 years
Am I bovvered to quote a saying
Not in the least as I have security for another 2 years :beer:

luluoliver

All that advice makes me feel a bit better about my rate! thanks everyone!! The grass always seems greener, but I am definitely one of those people who like the security of knowing what my payments will be, so the fixed rate is a better option for me. It's just when everyone keeps reminding you that they are saving a few hundred on their mortgage every month that you start to get a bit envious!!
We have decided to take the payment break on our mortgage while I'm on maternity leave, but we can still make payments each month if we want to, so I'm just going to try and pay a few hundred every month as I can afford it over the payment break to try and keep the payments down a bit at the end of the break.
I think this is a good idea anyway!!! If anyone knows different.. please do let me know!!!

thanks again everyone!!