Worth moving? Just months into a new deal

davidscot

We were asked when we were in our local bank (not our mortgage lender) if we would consider moving our mortgage to them.
I explained to them that we had just took out our existing deal in August last year and that it was a fixed rate of 5.45% for three years and I felt the penalty clause would be high.
Anyway they did some rough sums and came up with a new quote for a fixed rate that is less than we currently pay. Only thing is penalty for moving is just over 2K. Over the piece we would be saving a minimal amount when all is taken into consideration so do you think it would be a good idea to move?

Dan_1976

No, dont bother unless you make good savings, Only takes a !!!! up in the process and you may be out of pocket. Do the maths carefully, the other bank will put a positive spin on it!

Robert_Sterling_3

What are the details of the new offer?
You have not given enough information to do the sums.

beecher

Are there arrangement fees too? Would the 2k be added to the mortgage? To work out if you'd save money you need to work out how much your mortage would be at the end of the deal, compared to how much it'd be if you hadn't switched.

begbeer

We are in the process of moving from a fixed rate mortgage (7 months in on a three year term) to HSBC. Our existing mortgage is 5.29 and HSBC are offering 2.99 with an 599 arrangement fee, even paying Woolwich 3% of our outstanding balance we we be £1667 better off,

Robert_Sterling_3

What is the outstanding balance?

davidscot

Sorry for being a bit vague with the question.
Anyway here we go
Outstanding Balance 72K House worth at least 150K 18 years left.
Currently pay £545 on a 5.78% fixed rate which started Sept 08
Early payment charge just under 3K.
Been offered two deals set up fees the same roughly £500-600
First deal is 2 year deal at 4.49% paying back £513.85 a month
Second deal is 3 year deal at 4.29% paying back £505.84 a month

Still working out the best options so any help appreciated :beer:

beecher

So it would cost you £3500 to set up another deal.

If you took out the 3 year deal it'd cost you £3500 to save £40/month, ie £1440 over the 3 years, ie you'd be £2060 down.
If you took out the 2 year deal it'd cost you £3500 to save £30/month, ie £720 over the 2 years, so you'd be £2780 down.

It is a no brainer with a low mortgage like yours.

edit: I think it is pretty outrageous that the banks made out you'd save money by switching - I wonder how many people they con by doing this.

davidscot

beecher wrote: »

So it would cost you £3500 to set up another deal.

If you took out the 3 year deal it'd cost you £3500 to save £40/month, ie £1440 over the 3 years, ie you'd be £2060 down.
If you took out the 2 year deal it'd cost you £3500 to save £30/month, ie £720 over the 2 years, so you'd be £2780 down.

It is a no brainer with a low mortgage like yours.

edit: I think it is pretty outrageous that the banks made out you'd save money by switching - I wonder how many people they con by doing this.

Yes I thought my maths were working ok:rolleyes: Once you sit down and have time to think without the pressure of the advisor it all seems to fit.
Im sure they were only trying to save me money:mad:

davidscot

So we stay where we are then:j

robnye

also was the new deal going to be for the same remining time of your existing mortgage deal, ie 18 years (as at aug 08), so now 17 years and 6 months........