What to do with our mortgage?

DaveHemmerman

Hi, we are after some advice with our mortgage it currently stands at £54K with nearly 18 years left. We are fixed in with Nationwide for a further 3 years on a fixed rate of 5.44%. When we took the deal out % rates where going up so we thought it was a good deal at the time but obviously now they have dropped we are thinking of changing it. We currently pay £414 a month plus an overpayment of £200 a month. Nationwide want around £1600 to exit our current deal and a further £299 to set our new one up with them. If we were to put the exit fee onto our mortage that makes £55600 and we can pay the £300 ourselves that makes our new payment around the £350 per month, plus we can still over pay if we like (wife is due to give birth in 3 weeks so things may change on the overpayment part).

Just wanted peoples opinions on whether to change now or hang another 3 years as we would possible save around £1536 over a 2 year tracker.

Thanks for any advice.

Dave

Anon

You are brave, Dave, as there are a number of similar threads asking the same question if you have a quick read through this thread, particularly over the past week. In a nutshell, the advice I and others have been given is to work out the maths to see if, including the redemption penalty, it still works out cheaper.

Personally considering ditching a 5 year fix only one year in, redemption penalty around £3300 and considering the First Direct offset base rate tracker. The downside is that when (as is likely) the BoE rate starts rising, I would be at the mercy of that (and tied in 1.89% above base which is around what most mortgage companies are offering at the moment for this sort of product - apparently in October before the market started plummeting FD was 0.45% above base, which would have been an excellent deal!). It would need to rise between 2.5%/3% to be paying more than I am now, though. The other advice people have been giving is to go for another fix, but the fixed rates are not much cheaper than you are currently on for that period - worth checking though. Finally, the overarching advice has been to consider why you fixd in the first place - certainty of how much you would be paying each month etc (though personally, when I took it out, the rates were still rising and forecasts were that they would continue to rise, so thought I would be on a winner, rather than looking to pay the same each month ;( ).

Good luck

Anon

feisty1

Quote: now they have dropped

& what will you do when on a tracker, yr outgoings are more (baby), reduced income or child care costs???...rates start rising......take another hit o the ERC's adding it to yr mortgage and most probably a hefty arrangement fee aso to fix again

DaveHemmerman

We want to reduce the mortage obviously not increase it or the term thats why we overpay and why we also knocked one year off the term when we renewed last time, we could pay the exit fee out of some savings which would reduce the monthly payment but like i said with a baby on the way we thought it best to have some savings currently £4000. I had thought about changing to a tracker but instead of paying approx £350 was thinking of asking them to reduce the term to around 15 years which would then make our payments the same as now but with less years?????

Thanks for your help.

getmore4less

Have you crunched the numbers properly including the fees.

You don't say what the alternative deal is so can't do it for you.

Give full details of the options so someone can cross check your calcs.

feisty1

fixed rate of 5.44% is a good rate for someone who likes stabiity of payments..