Ditch my fix?

Engeroosi

I have a fixed rate of 6.29% which ends in September 2013. At the moment I have an ERC of £5,500 or thereabouts. I have sufficient funds to pay this amount. My house is valued at around 182000. The outstanding balance on my mortgage is 140000. Currently paying 947/month but I pay a round figure of 1000 which means I am overpaying. I can overpay upto 10% of mortgage balance a year with any charges.

Is it worth me looking to remortgage and take the ERC hit? Hoping a mortgage advisor can help me with this one. It annoys me that i'm paying such high interest when everyone seems to be paying a lot less!

CloudCuckooLand

Depends in part on why you are paying such a high rate in the first place.

Just bad timing?
A choice to make a long-term fix?
Poor credit history (or another issue) in your earlier application - and whether that issue has gone away or remains..?

i.e. what rate would you reasonably anticipate being able to get in today's market.

If you could save £100 per month, for example, that would take nearly 5 years to make it worth the ERC. So, probably not a good idea.

There are trackers out there under 3%, which could save hundreds. Say you saved £400 a month, it would take a year to recoup the ERC. But are you happy with the uncertain of tracking, having fixed before? If rates shoot up in 2011, you may rue dropping a fixed deal.

It comes back to whether you would get such a deal, though. All very well being envious of other people's rates, but they probably have different circumstances.

Engeroosi

Fixed at a bad time, before the rates fell. Credit is perfect, at the time of getting the mortgage(which was 2 years ago) only had 10% deposit, paid 160,000 for property. Only other issue was my fiance and I both have interests in other property. I rent mine out and the rent covers 150% of mortgage payment and she has a joint mortgage with a friend who still lives in property and pays all the bills and mortgage. I get paid over 35,000 a year and she is getting over 21,000. How much over depends on Overtime and bonus but cant be guaranteed, although always is the case.

RenovationMan

As the previous poster has indicated, unless you could get a low rate, and guarantee it for at least a year, then its financially not worth doing. Instead, could you look at softening the blow and making the maximum overpayments you can on the mortgage (£14,000 this year) and then put other savings into savings accounts with the best rates you can find.

Engeroosi

That is what I think I will do, don't really fancy the hassle of re-motgaging if only going to save a small amount. Although I do like the sound of a mortgage with only 3% interest, it would more then half the amount I currently pay leaving the rest all coming off the capital.

TrickyDicky101

Engeroosi wrote: »

That is what I think I will do, don't really fancy the hassle of re-motgaging if only going to save a small amount. Although I do like the sound of a mortgage with only 3% interest, it would more then half the amount I currently pay leaving the rest all coming off the capital.

That's unlikely unless you are interest only (and it sounds as if you are not given you have repaid a chunk of the capital). What's the term of the mortgage (original)?

Engeroosi

it will be more than the amount of interest I am paying is what I meant, it was a 25 year term with fixed rate for 5 years. I am looking to clear the mortgage in more like 12-15 years depending on circumstances with work etc.

herbiesjp

Where did you get the valuation of £182k from - has it really gone up £22k in the last 2 years?

Engeroosi

Using the website Zoopla and local estate agent site looking at current house prices, yeah the prices have gone up in my area.

beecher2

Engeroosi wrote: »

Using the website Zoopla and local estate agent site looking at current house prices, yeah the prices have gone up in my area.

Might be a bit unrealistic to look at local estate agents - have a look on nethouseprices or ourproperty for a clearer idea of what similar houses have actually sold for.

Engeroosi

Well houses are selling not long after going on the market for offers over the prices im looking at which is a good indication i think. Also do Zoopla not take into account all the actual sold prices etc in giving the estimates? All is circumstancial really but I do know that the prices have went up since I bought it as Aberdeen seems to have avoided most of the current issues