Remortgage or not?

Potripper

Hi all,

I am considering remortgaging from a fixed rate (4.69%) to a tracker type mortgage. The best offer i have is 1.99% 2 year tracker, this includes a £1500 arrangement fee & will bring down my payments from £549 pm to £451 pm approx.
I will incur a early repayment charge of 2100 as i am tied in until 01/01/2013, that obviously will be added to the £75580 redemption figure.
I have tried My lender (Northern rock) to reduce this amount to stay with them, but they wont & their best offer is 2.69% 2 year tracker with a £950 arrangement fee.
Any help or ideas on which way to turn would be helpful, i am still searching for brokers & will try L&C next after reading the remortgage guide & will keep updating as i progress.

Thanks Steve

_Andy_

Hi Steve

OK so you're considering changing lender at a cost of £3050 to save (at the moment) £150 a month.
In addition you'll lose the stability of payments which you took the fixed mortgage out for in the first place.
You have a decent rate giving you stability for a decent amount of time.
I don't see that exiting early is financially sound.

Potripper

Hi Andy,

Thanks for your imput. I have checked back with the broker & the total cost would be about £4000, which would be added to the mortgage. I would be saving just under £2000 over the 2 years.

Maybe i should of mentioned another reason for remortgaging is to reduce my payments as i have taken a massive cut in earnings but you are correct in thinking that £2000 seems a high price to pay to reduce the monthly payments.

I will try other brokers to see if i can get the arrangement fee & costs reduced & Northern rock again to see if they can waiver some or all of the early repayment charge, any suggestions as to what i could say to them to convince them to keep me as a customer?

Thanks again, many heads are better than one!
Steve

_Andy_

You're welcome

NR won't reduce the ERC. If reducing the payments is an urgent issue you could possibly explore extending the term, or even going interest only for a short period (i.e. both options involve staying with NR).
Other brokers will access the same products so I don't see a benefit in approaching others.

The problem is with your sums is you're assuming the BR will stay the same during that period.
I would suggest using a mortgage calculator (e.g. the BBC one) to see the effect a rise in rates would have on your payment (er.g. .5%, 1%, 2% etc).

I can appreciate you want to reduce the payments and the tracker may seem attractive but I don't feel it makes medium-long-term sense.

Potripper

Some good common sense goes a long way Andy, thanks. I was basing it on the fact that the rates would not rise & suppose it's wrong to assume they wont.
I have spoken to NR again, & again your right on that one, they wont reduce (cant blame them really, either way they get their money!)
I can use 3 payment holidays, which seem to be the best option for me here should things not improve in the next few months.
Thanks again for your help much appreciated. :beer:
Steve

_Andy_

You're welcome, best of luck