Changing mortgage deal but same provider?

Humpledunk

Hi,

I don't post much on here, but just looking for some advice.

I bought a flat about 20 months ago with my partner, but due to a change in personal circumstances I need to take this mortgage on myself. I have been to see an advisor at my mortgage provider (RBS) and they were very helpful.

I just wondered if I could run some figures by you guys?

There is still £98,000 left on the mortgage at a fixed rate of 5.67% for another 3 years, which I wouldn't quite be able to afford, so by borrowing some money from my family, I am hoping to reduce this to a £75,000 mortgage by making an overpayment now, and in a couple of months when the next year of the mortgage starts, which would leave me about £4,500 on which to pay a manageable overpayment charge.

What I thought may save me money would be... I was thinking if I could make the two overpayment charges, reducing the remaining mortgage to £75,000 and then cancel my existing mortgage deal, incurring a fee of around £2,250 and set up a new 2-year mortgage at a fixed rate of 3.79% which I think would save me money, over two years? Also, if I am cancelling my existing mortgage would I count as an existing customer or would I have to be a new customer (different set-up fees)?

Can anyone advise me if this is a good idea, or whether it really all comes down to a similar figure?

Thanks

CloudCuckooLand

Current deal around £659 a month?
New deal on £75k around £424 a month?

So you save £235 a month, £5640 over two years. Half of that has gone in fees up front. Another fee for the new product in two years take another bite, plus you or your family have lost interest on £20k+ etc, doesn't leave much gain imo.

Depends how truly borderline things are. A lodger could be a cheaper/short-term solution.

And there is the risk that you finish your two year deal just when rates are worst - although thats also true for the end of the 5yr - but there more chance of the country being out of trouble in that extra year, I hope!

Or, if your family are amenable, keep the £20k, put it in the best three year ISA/Fixed rate savings accounts you can find, use the interest and some occasional dipping into it to afford the current deal, then its mostly there if family urgently need it back for any reason, and/or when your situation improves.

dwsjarcmcd

You will need to check with RBS but I am not sure that the overpayment you intend to make will actually reduce the redemption charges. It is possible that they would still apply the full amount based on the original balance.

As I say, you need to check.