Please advise. Is it worth the penalty and jumping ??

wizzard1974

Hi Please can somebody help and advise if possible ?

I have a repayment mortg with the Halifax and on a fix rate of 5.49% for 5 Years, my deal finishes May 2010. I pay 700.00 a month and owe 106000. My property valuation is approx 167000.
Now i know i would have to pay a penalty if i left Halifax 5 yr fixed which is 2300.
Would it be worth it as i have seen the A&l 5 year fix at 3.99%

I don't know what to do, Also i know i only have just over a year to go, but in the back of my mind is this time next year we could be looking at 6 to 7 % instaed of the 3.99% now

Any advice would be much appreciated thanks....

Martinslovechild

There are several factors in working out if this is going to be a better deal for you...

You haven't said how many years are remaining on your mortgage.

I would suggest setting up a spreadsheet with two sets of figures. Clearly, the interest charged on the A&L deal will be less - but you must factor in the £2300 charge which will clearly reduce the saving.

Check out www.whatsthecost.com/mortgage.aspx which may help you. Alternatively, download the Loan Amortization Microsoft Excel template from the Microsoft website which I've found enormously useful in the past.

wizzard1974

Hi I have 21 years remaining. Whats the 65% you have to have to qualify for the A& L 3.99% mortg. Thanks

Martinslovechild

This means that A&L allow you to borrow a maximum 65% of the value of the property. Therefore, if you wish to borrow £106,000, then A&L will need to value your property at £163,076 or above for you to qualify for the deal (106000 / 0.65).

As your own valuation is just above this level, it's anybody's guess as to whether A&L would offer you the deal. Given that house prices are falling at between 1-2% a month, your property is effectively reducing by between £1700 and £3300 per month, so it could be touch-and-go.

Do you have any savings perhaps which you could use to overpay your mortgage and effectively increase your equity to ensure that you fall below the 65% level ?