The "Should I Ditch my Fix?" Calculator Discussion Area

kabads

mortagemad wrote: »

Hi

Does anybody know whether you have to pay these up front, or whether they are added to your outstanding mortgage loan?

Thanks

Just switched from my fixed mortgage to a variable one - the fixed had an ERC which they just added to the redemption certificate. I paid these manually by asking for a lower amount from my new lender and making the difference up by paying with my credit card. There was an option to add it to the mortgage, but I wanted to avoid that as I'm trying to get it down as much as I can can. HTH.

MarkyMarkD

mortagemad wrote: »

Hi

Does anybody know whether you have to pay these up front, or whether they are added to your outstanding mortgage loan?

Thanks

Given that you can't normally "ditch your fix" except by remortgaging, the question is moot. The ERC is part of the redemption amount on the old mortgage, and so it's up to you if you borrow it as an increase in your mortgage balance or pay it off at the time of remortgaging.

shipleyboy

Hi newbie here,
I am two years into a five year 5.69% Fixed rate deal with 4% ERC (rate goes down 1% each year)
outstanding loan is £168500
redemption fee is £6700
monthly payments are £1550 but I overpay slightly paying £1650 pm

I have used the ditch my fix calculator and it says I need a new rate of consistently below 4.2% (4.1% with £500 in fee's)

I would pay the fee's upfront and not add to the loan.

I have seen a deal at 3.94% fixed for another 5 years, my calculations make it a small loss over three years remaining but into profit if I calculate it over 5 years. Can somebody confirm if I have worked these out right please.

MarkyMarkD

Depends what the rate is at the end of the term on each of the deals. If they are the same, then it might (just) be worth switching. If the revert rate on the existing deal is better, it might not be.

shipleyboy

thanks for the reply MarkyMarkD I think most fixed revert to standard variable don't they after the fixed term ?

latecomer

most do but check before signing anything.

shipleyboy

Thanks latecomer, both lenders key facts doc says they revert to the banks standard variable rate.

(My current mortgage says in oct 2013 it will revert to Marsden's standard variable rate currently 6.99% (as that was written in 2008)), and the new one which expires in 2015 reverts to HSBC's standard variable rate currently 3.94%.

MarkyMarkD

Most revert to SVR, but many from 2006 to 2008 (approx) revert to very attractive lifetime tracker rates. For example, all A&L mortgages reverted to BBR+0.75% for a while, if I recall correctly.

Given that Marsden SVR is likely to be higher than HSBC SVR in the future as well, switching seems like a good move.

shipleyboy

thanks for the help.

FUNKYDADDIO

Hi,

Im hoping someone can advise me please.

I have 110k left on my mortgage with 18 months left @ 5.67%. The calculator states that I would need a rate of 3.54% or less to make up for the ERC of £3500. With the LTV open to me there are rates available below this but not many. As I a trying to get a bigger mortgage to move to a bigger house soon would it be foolish to ditch at this stage?

Many thanks,

Paul