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Rockydennis_2
Posts: 13 Forumite
Currently two years into five year fix at 6.24%.
Mortgage outstanding is £112,700. Pay £865 a month.
18 years left on mortgage.
ERC is 3% of balance, approx £3400.
Thinking of applying for another five year fix with different lender at 3.94%, paying ERC and reducing mortgage to 13 years. This will make my monthly repayments £965 a month.
Is this a good idea??
Many thanks.
Mortgage outstanding is £112,700. Pay £865 a month.
18 years left on mortgage.
ERC is 3% of balance, approx £3400.
Thinking of applying for another five year fix with different lender at 3.94%, paying ERC and reducing mortgage to 13 years. This will make my monthly repayments £965 a month.
Is this a good idea??
Many thanks.
0
Comments
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Does anybody have an opinion on the above. Thoughts would be really appreciated.0
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It depends on fees etc.
Like for like the ERC can be swallowed up in 3 years by lower payments, even allowing for the additional borrowing to cover the ERC.
Putting yourself into a decent 5 year fix could be a good move.
If you are comfortable with the payments then it looks to be a decent move considering it will bring down your term.
Personal choice at the end of the day but the figures do make some sense.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
have a look at the all new singing and dancing MSE mortgage calculator. There is a useful tab for just your question
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Save 6.24% - 3.94% = 2.3% pa for paying 3%.Rockydennis wrote: »Currently two years into five year fix at 6.24%.
Mortgage outstanding is £112,700. Pay £865 a month.
18 years left on mortgage.
ERC is 3% of balance, approx £3400.
Thinking of applying for another five year fix with different lender at 3.94%, paying ERC and reducing mortgage to 13 years. This will make my monthly repayments £965 a month.
Is this a good idea??
Many thanks.
Pays for itself in 3/2.3 = 1.3 years.
You can ignore the overpayment considerationHi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
As above, it's a no brainer to ditch this for another 5 yr fixed (assuming you are comfortable with tying yourself in for the extra 2 yrs at the end of the new deal). Equally a 2 or 3 yr fixed (or even a tracker) are likely to pay for themselves over the deal period given the relatively low penalty (and high rate) on your current 5 yr deal.0
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http://www.whatsthecost.com/mortgage.aspx
With your current loan paying £870pm the outstanding debt in 3 years is around £101,489.93
add the fees £116100 @ 3.94 £870pm outstanding in 3 years £97,453.26
So about £4k better off.0
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