Re-mortgage - do I, don't I?

wamballa

Hello!

Should i stick with my high interest rate mortgage or switch to lower interest rate tracker (and increase my overal mortgage debt)?

Currently;-
- Mortgage debt = 192K
- Property valuation = 222K
- I'm 2 years into a 5 year fixed rate mortgage with Halifax. Interest is 6.59% with monthly payments of £1350.

Want to try to reduce monthly payments. Independent mortgage advisor found a 3 year tracker at Halifax, currently at 2.99%. Monthly repayments £960. Switching to this product incurs costs of - 5% penalty for breaking existing mortgage + £1200 transfer cost to new product + £100 deeds.

Any help much appreciated!
Wamballa

_Andy_

I appreciate you're looking to reduce the payments but why do you (and indeed the broker) feel a tracker is now suitable?
I ask this because you took a medium term fixed rate product, presumably for security / payment stability, which you will no longer have.

wamballa

Main reason is to reduce monthly payments and been lead to believe that tracker is my only option due to LTV ration I have. I'm willing now to take some risk, especially if it means not paying 6.5%.
Cheers
wamballa

_Andy_

I'm sorry but I don't think this is a good idea at all. Your mortgage balance is going to increase immediately by £10,800 and would take you over 27 months just to break even (and that doesn't even take into account base rate rises).
It doesn't make financial sense at all and your adviser isn't doing a very good job to be honest.