stuck in interest only at 5.99% 4000 quid exit fee

dimbo61

Check with your lender if you can pay off some of the mortgage
You said it is IO so ring them up and ask
Then its up to you if you have half the mortgage and the £4k ERC sitting in savings accounts earning 1-2%
You will not get 2.5% but some lenders are doing good deals with a good LTV
You dont say how big the mortgage is £50k/£100k/£150k so you need to work out all the costs to get out of this deal and what you can get today.
BUT check with lender first if they allow part payment of IO or monthly overpayments.

Cannon_Fodder

you have £4k to pay the ERC, and are considering paying off half the mortgage in cash ?

why not jusy pay some capital back? either each month or in one go.

check for overpayment/lump repayment terms/fees, of course...

and/or take the cash and get a repo if its still burning a hole.

Anon

It depends how long you think that these low rates will be around, a like you I listened to all the predictions at the end of last year and locked in while rates were rising, only for them to plummet recently. I am considering bailing out of a 5.63% five year fix, only one year in - £3k exit penalty (£4k approx including fees for new mortgage), £100k outstanding and switching to BoE+1.89% tracker offset with First Direct (currently 2.89% - or 2 year fix at 3.39%). By keeping my existing payment level (currently overpaying the maximum £500 per month, therefore around £1200) it will take around a year to recoup the penalty (assuming rates don't rocket), and save around £10k in interest over the same 4 year period. Clearly, my logic is flawed, in that the rate is variable and therefore unlikely to stay at this level for all that period - but while it is, it means I can (funds permitting) pay off a substantial chunk of the capital before the rates start going up again, reduce the term and get a significantly better return on money sitting in my account. Am I missing something?

Anon

feisty1

yes........valuations dropping further.......then what yr LTV might be when yr looking to fix when rates start rising, don't think lenders will miss the opportunity when people start rushing to fix, they will be calling the shots, higher arragement fees, fewer incentives etc

the_root_of_all_evil

Anon wrote: »

It depends how long you think that these low rates will be around, a like you I listened to all the predictions at the end of last year and locked in while rates were rising, only for them to plummet recently. I am considering bailing out of a 5.63% five year fix, only one year in - £3k exit penalty (£4k approx including fees for new mortgage), £100k outstanding and switching to BoE+1.89% tracker offset with First Direct (currently 2.89% - or 2 year fix at 3.39%). By keeping my existing payment level (currently overpaying the maximum £500 per month, therefore around £1200) it will take around a year to recoup the penalty (assuming rates don't rocket), and save around £10k in interest over the same 4 year period. Clearly, my logic is flawed, in that the rate is variable and therefore unlikely to stay at this level for all that period - but while it is, it means I can (funds permitting) pay off a substantial chunk of the capital before the rates start going up again, reduce the term and get a significantly better return on money sitting in my account. Am I missing something?

Anon

yep i hear you, sounds very similar too my predicament.

i have been thinking about all the comments i have had on this thread. i now see that this isnt as badder rate as at first thought.

anon, just like me you were subconsciously forced into taking the fixed rate probably like many others who watched any news stream and constantly read forums like this one. you jumped on the fix because at the time there were interest rate figures of 15% being banded around with a return to 1930's economy and plenty of what i now deem to be scare tactics here there and every were.

so you fix 3-5 years like im sure 100's of thousands did at around the 6% mark and paid a scandalous arrangement fee and felt good for a while thinking that you had acted responsibly because the stormy weather was just around the corner.

then the rate starts to plumet and plumet and plumet........ and its like hang on a minute thats not whats supposed to have happened, is it?

so now im thinking this whole thing is orchastrated, by the people in the know, the bankers, the goverment big bussiness the uluminati who ever it is is playing us like a fiddle, everyone that has seen that mortgage deal at first direct must be thinking what we are thinking now, that deal is what kicked off this thread for me when i realised i may have screwed up big, and a trip to the halifax and a 4g exit fee confirmed this.

so i have decided using my theory above, if we jump off the fixed rate band wagon now and pay the ridiculous exit fees guess whats going to happen.

6months a year into the new mortgage rates will shoot up youll be paying more than you ever were + the exit fee of your previos mortgage, and when your about to lose
everything the GOVERMENT or WHO EVER will say "well we did say rates may go up to 15%" :T

(deep breath):rotfl:

udydudy

All depends on what your actual mortgage amount is!!. i.e what %age is the £4000 to your outstanding mortgage. Before yesterdays rate cut most fixed rate equated to around 4% over 2 or 3 years if you added in the booking fees. In your case you would need to factor in the £4000 (as %age) cost on top of this. So if your outstanding mortgage is £200000 (assumed) a new 2 year mortgage would mean adding 1% per year to the cost of the new mortgage.

if this works out cheaper then yes it is better to shift. but my suggestion is to remortgage (if it is financial workable) to a fixed rather than a tracker rate.

The variable rates may look attractive but it would only be so if things stay depressed for longer. In all practicality they would start to move up over the course ofthe next 1-2 years. and anyway most trackers are running at nearly 2% over BoE.

put your mortgage amount and your LTV and guys on this forum may be able to work out the case for different products available on the market.

opinions4u

the_root_of_all_evil wrote: »

when i took out the mortage about a year ago 5.99 was actually a really good rate!

It wasn't bad a year ago. Times change. That said, 3 year fixed rates aren't significantly cheaper now.

now i want o get out of the 3 year interest only fix it but the halifax tell me itll cost 4000 pounds :mad:

Without knowing how much you owe, people can't help you. If you owe £40k then the penalty is high. If you owe £400k, the penalty is low. From the information given you might as well have said I want to by lots of bags of sugar for £10. Without know how many bags nobody knows whether it's a good idea or not. Additionally, you should be able to transfer your mortgage off interest only, regardless of the product you are on. At least this way you can start getting the debt down.

is ther anything i can do about it?

1) Pay the penalty and transfer to a cheaper product. Work out how much a cheaper product will save you. Additionally, you need to decide what might happen to interest rates over the next 2 years - pay £4k, transfer to a tracker and watch the rates rise sharply and you'll have made a poor decision. If they stay low, then you called it right.

2) Do nothing. You took a fixed for a reason. You don't in any way suggest that those reasons have changed.

Pssst

How would you like 0.5% (on savings?)

_Andy_

the_root_of_all_evil wrote: »

yep i hear you, sounds very similar too my predicament.

You don't have a 'predicament', you have the security of a fixed rate (which, presumably, is what you wanted when you took it out.
People stuck on Northern Rock SVRs, or sub-prime Libor-linked SVRs, people in negative equity, or people who have lost their jobs and are worried about losing their homes have 'predicaments'.

you jumped on the fix because at the time there were interest rate figures of 15% being banded around with a return to 1930's economy and plenty of what i now deem to be scare tactics here there and every were.

At the time, swap rates were increasing dramatically.

So you fix 3-5 years like im sure 100's of thousands did at around the 6% mark and paid a scandalous arrangement fee

Why did you pay it if you felt it was 'scandalous'?
On what basis do you feel it was 'scandalous'?
Are you aware of how fixed rate mortgage funding works?

so now im thinking this whole thing is orchastrated, by the people in the know, the bankers, the goverment big bussiness the uluminati who ever it is is playing us like a fiddle,

Utter, paranoid nonsense. So 'the bankers' 'orchestrated' something which has resulted in less business, less profit, less bonuses and massive redundancies? Erm....that really makes sense..

deefadog

I am on 5.19% fixed with NR, this will run out next October and i too have a exit fee up until the exit date of 4k+ - No way i am getting out. The rate is good and i am comfortable with the payments (the whole reason for taken it in the first place).