fixed rate ending soon

JBsplit

my current deal is with norwich and peterborough fixed for two years at 3.9% this is due to end january 2007 but after that i am on the standard rate for another 3 years(redemtion fine), at the time it was a very needed reduction in my payments and although the standard rate is just about managable i am wondering if its a good idea to swollow the 4k fine and get out of it altogether and move to another low rate. could i make enough of a saving over the next three years to make the fine worth it.

one last thing, are 35 year mortgage deals false economy.

current mortgage is 85k ,value of house is 180k ,21 years left on mortgage
and i am now 30years old.

i hope thats enough info.
thanks

MortgageMamma

Hi there

You need to see a whole of market mortgage advisor who can look for the best deal for your circumstances and then working out if the savings outweight the redemption penalty on your mortgage, taking into account fee's/costs of switchng etc

Joe_Bloggs

From what I can see the monthly payments are approx
£495 at present. In six months time the mortgage will be £83000. I assume the term remaining will be 20 years.

You face the payments becomming £610 (over 20 years, Nor&Peter SVR 6.3%).
The cost of doing nothing for three years is:-
36 * £609 = £21924

Add early repayment fees of £4000 and add say £800 remortgaging costs gives a starting total of £87800. Remortgage at 4.75@ over 20 years gives.
36* £567.40 = £20426

The difference is £1498 in favour of a remortgage. You would have paid nearly £5K in fees and by seeking a modest interest rate, spreading the fees out over 20 years, you can hide this cost.

If you remortgage for 25 years you can be close to where you started.
36 * £500.56 = £18020.

A difference of £3904 over three years! I won't consider the extra 60 mortgage payments 20 years down the road. Watch out for extened tie ins at extortionate SVR rates from crappy lenders in the future.
J_B. (You can massage the numbers in so many ways.)