Dilemma regarding remortgagaing - several options

crowjane

Hello

We currently have a fixed rate mortgage with 3 years left to run and a hefty (2%) ERF - the rate is 4.99% and we have a large mortgage so a lower rate could save us a £100+/ month.

The options for remortagaing (with our current provider) are a tracker rate of 3.29% saving us £125/ month (allowing us to add the fees to the mortgage) or the rate available up to 65% ltv at 2.59% which would save us £208 / month but leave us with no savings and no draw down available from our mortgage (we have an offset mortgage).

My head is mashed as I keep going round in circles veering between dread of losing our savings and desire to reduce outgoings (as husbands income is due to decrease by several hundred per month from June) - it is all very confusing.:( We have no other debts as credit card is paid off in full each month.

So opnions are welcome what makes more sense - reducing overall debt and monthly repayments and losing savings or adding slightly to debt retaining savings but paying more? Currently I am not working (we have v young children) but I do intend to return to work in the future - with uncertatinty in the job market I cannot rely on forecasting future income however with 3 (growing) children shopping bills are rising fast!

wwyd?

crowjane

Please excuse horrible spelling mistakes I have a head full of cold and am dosed up with painkillers - are contributing to inability to see through my mortgage options - see I really need opinions!!!!

beecher2

I'd stick with the 4.99% which isn't a bad rate to be on at all. Interest rates can only go up and if a cut of 2.49% would save you £208 then you'd be hit hard if rates went back to their 'norm'.

Why not post a Statement of Affairs to see how you could save money from your bills. There's lots of good advice on the other boards on how to cut down your food spend, cut back on non essentials and save money on utilities.

_Andy_

Agreed with beecher - you have a decent fixed rate with the stability of payments. The tracker may be appealing in the short term but I doubt it would be worth the ERCs.

Thrugelmir

Stay put. Moving to a variable rate of interest could leave you very exposed, particularly with the no savings left option. Adding fees to the mortgage balance isn't a wise move either.

You have an offset facility with your current mortgage that if used correctly should save you interest.

Have you considered asking your lender if you could extend the mortgage term. By doing so your monthly outgoings would be reduced.

crowjane

that is interesting thank you - I thought that a fixed rate for 5 yesr was a good idea a couple of years ago and was a bit gutted to watch as the interest rates fell further.

However we have some large fixed outgoing s and then discretionary spending to look at reducing - I just thought it would be a good idea to look at the mortgage as it and our credit card bill are our largest monthly outgoings.

Still there are plenty of other places to make savings on I am very sure!

_Andy_

Is your SN a reference to the Nick Cave song by the way (excuse the tangent)?

crowjane

totally lost this thread after starting it - so in answer to Andy my name is a Nick Cave reference - one of my favourites artists but I doubt he has much interest in money saving !?

And in response to the other advice - I am still thinking I could save here so why is the advice to stay put? What could I lose by moving? If the rates go up I suppose? Any other reason?

crowjane

I just mean that when I use the website tool (should I ditch the fix?) the balance comes out in favour of moving if the rate is lower than 4.29% which I can certainly find - it is a nice start to my budget - but perhaps I have become monthly outgoings fixated and am failing to see the bigger picture?

beecher2

When the rates go up, rather than if! 4.99% is a pretty good rate and you'd be snookered when rates go up. You have to think past the immediate short term

crowjane

Thank you Beecher - but if the rates look to be on the rise I can move again without redemption fees this time - I see your point of course. However we are able to pay the mortgage easily enough even if the rates rise, we are not over extended - it is our only debt - we are not gambleing with our ability to pay iyswim - merely trying not to pay more interest than we have too.