Tied into a fix for 2 more years, is it worth re-fixing?

blakea8k

I have a mortgage of £79,000 on a property that was bought for £180,000 in 2007. I am fixed for another 2 years at 5.84% with a 2% repayment fee now or 1% in december.

With the recent cuts am i better off staying the 2 years or is there a deal where it would make financial sense to pay the penalty and refix for 5 or preferably 10 years as i do plan to stay here.

Thanks in advance

beecher

You need to work out your ERC, and look at some 5 year deals available - the ones I've seen are mostly 4.5% - 5% so I doubt you'd save enough to make it worthwhile. Remember to factor in the arrangement fees too.

dimbo61

Do you have any extra savings that are earning you very like in interest ?
Taking a long term view and fixing for 10 years with a 10 year mortgage would mean you know what your mortgage rate would be for the rest of the mortgage !!!
As beecher has said most 5 year deals are around 4.29/4.69/4.99%
You need to work out the figures.
Can you afford to repay the mortgage over 10 years
whatsthecost is a good website to work out the figures.

daveb975

blakea8k wrote: »

I have a mortgage of £79,000 on a property that was bought for £180,000 in 2007. I am fixed for another 2 years at 5.84% with a 2% repayment fee now or 1% in december.

With the recent cuts am i better off staying the 2 years or is there a deal where it would make financial sense to pay the penalty and refix for 5 or preferably 10 years as i do plan to stay here.

Thanks in advance

I'd wait. You would be paying £1,600 now or £800 in December to move. Add in fees for a new deal/valuation, and you will be looking at a lot more.

The interest element of your mortgagecosts abvout £385 per month now. Even if you want to move to a 2 year fixed rate at 2.99%, you will still be paying £200 per month. The £185 saving per month is good, but almost 9 months of this saving would be swallowed by the £1,600 exit fee, and probably the same again for the new arrangement fee.

As you want a longer fix, the rates are even higher, so the savings are lower.

Hopefully, rates will still be low in December, and you might be able to pick up 5 years fixed rates at sub-4% with a reasonable fee. This would definitely be worth doing.

blakea8k

I thought i would give an update on what i had decided

In the end i payed the 2% penalty and took the A&L 5 year fixed at 3.99% with no fees. It seemed like the rates wouldn't get any lower.

*Waiting for someone to point out that it was a huge mistake*

opinions4u

blakea8k wrote: »

I thought i would give an update on what i had decided

Appreciate it!

In the end i payed the 2% penalty and took the A&L 5 year fixed at 3.99% with no fees. It seemed like the rates wouldn't get any lower.

Seems like a good call to me. I'd be surprised if 5 year fixes went lower than that.

*Waiting for someone to point out that it was a huge mistake*

Time will prove if it was a good call or not. But, to be fair, you have bought a guarantee of what your payments will be for the next 5 years, not paid a £1000+ product fee (although there is the 2% ERC, but that will pay for itself within 14 months) and got a rate that is lower than those currently available.

Good call.