Advice Please - ditch 6.29 fix?

geri33

We are currently on a 6.29 fix until 1 March 2010. ERC is £5200. Monthly repayments are £1146 (mortgage of £162000 for 22 years) but we have recently started to overpay an extra £154 per month bringing our repayments up to £1300.

Bearing in mind the ERC and also the first of the low 5 year fee free fixes to hit the market we are unsure what we should be doing.

We have some extra cash so we would be remortgaging for £150k.

Advice would be gratefully appreciated.

Thank you!

mummytofour

No idea but you are not alone with the fix period. I wish we had know 18 months ago how things would be now. I am fixed at 6.59 £990 on interest only bar hum bug!

Robert_Sterling_3

You only have approx 1 year left.
ERC £5200
So to break even for that one year you would need to pay about 3% on a new mortgage.
These figures are broad brush mental arrithmetic in the right ball park area.
They assume there is no arrangement or other fee involved.
There is no way of knowing what will happen to interest rates in the future.

Woby_Tide

have you used the calculator?

http://www.moneysavingexpert.com/mortgages/fixed-discount-mortgage-guide

geri33

Yes the ERC is extortionate at £5200. Part of me thinks why should we pay that money to come out of the deal early, especially as we're not going to get a new deal overnight and so we're moving closer to the end date of March 2010 all the time. The best deal we have seen is A&L 3.99 fix no fee for 5 years.

Woby_Tide

£150k at 6.29% = c.£9400 interest per year
£150k at 3.99% = c.£5900 interest per year

so thats £3500 of your £5200 taken care off in one year

what do you think will happen to deals in the following 4 years if you take the A+L fix compared to going on an SVR or a fix in 1 years time is the guesswork. Will you save £1700 in that next timeframe

dimbo61

I would make the max overpayment each month allowed for the next 12 months and see what deals you can get then.
the A&L 5 year deal is the best on the market at the moment but there will be plenty of deals next year ( the government is asking lenders to lend again )