working out the maths

resi

hi all
I am scratching my head madly and even tho i am a self confessed excel lover i can't work out the maths...

i have a remaining mortgage for £32300 with the coop bank on a £117k value house. it's on a fixed rate (sorry rate not handy right now) and i am repaying £368 a month. the deal is fixed until 2013

I checked an online calculator from another bank (lloyd TSB) and i could lower my mortgage repayment to about £210 monthly

what I am trying to work out is: the extra per month and the penalty of getting out of the coop bank - is it worth the switch? would i be better off?

can someone point me to some help?
I am getting a saving of about £5k (but bank was closed to find out what the get out early penalty would be so that not calculated in)

help as always much welcome
thanks for reading
R

[Deleted User]

You'll need to advise your current rate, the rate of the new product, whether it's fixed or tracker,the term of the new mortgage the current SVR at the end of both products and the ERC, if someone if gong to do an accurate calculation.

resi

thanks! I will phone coop tomorrow and find out more detail

resi

sorry for the delay just called the cooperative bank and:

remaining balance £31K c

I am on a fixed rate deal coming to an end on 31/10/12
the fixed rate is 6.19%
penalty to leave deal earlier £634.72
i can (and have been) making extra payment yearly of 10.00% of balance.

I am at this stage just wondering if it is worth for me, based on these figures, to pay the early exit penalty of £634.72 and to get a new deal. I did look on online calculators but have no specific deal in mind as it is.

thanks for the help in advance!
ttfn, R

dimbo61

Should I stay or should I go now is the question!
Just had a look at the YBS 5 year fix at 4.49% and if you took the term over 5 years you would pay £587 a month (thats £31,000 plus £495 fee )
Now do you want to be Mortgage Free asap and is it worth paying £635 ERC plus maybe EXIT fees to leave the coop and move to another lender and are you best going for a fix or a tracker First Direct/HSBC have good deals.Decisions,Decisions,Decisions
Use "whatsthecost" to work out the maths

CloudCuckooLand

£150 a month saving. £634 charge. Will take 4 and a bit months to recoup the charge. Then you start saving...

You can play with all sorts of figures, and compare products you find elsewhere, here; http://www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator


BUT

To be saving £150 a month on such a small amount of capital, the rate at Llloyds TSB must be tiny...2% or so...? Need your full mortgage term end-date, rather than deal end-date, to calculate.

Sounds like a tracker.

If its a tracker, I would think very carefully. Rates have only 1 direction to go. By the time 6 months have passed and you start to save properly, the BoE could have succumbed to inflationary pressure...you'd need to find another deal, which will already have higher rates priced in...

There was a reason you chose Fixed originally? That doesn't stop being valid just because you are on the down-side for a while.

If you can find a fresh Fixed deal, under 5% it may still be worth switching. The gain would be less, so it would take more months to recoup the charge, but if a 5 year deal you'd have plenty of time to do so...

resi

thanks you very much for all your great help. some food for thought but my first reaction is to stay here where i am...

will find more about the end date - think was 25yrs term in 2008...

back to ringing the coop back eh? thanks again, very much appreciated your advice

HappyMJ

You can pay an extra 10% off the balance each year but that 10% is calculated from the original loan amount not the ongoing balance. So if it started at £40,000 and is now £31,000 you can actually repay an extra £4,000 per year to avoid the penalty for repaying early. Ring them up and find that figure out exactly. You will not save £5,000 on such a relatively small balance. The fees charged will cut the savings to almost zero. You are paying only £1,900 in interest each year so reducing the interest rate by 1% will only create a saving of £310 per year. i.e it will take nearly 2 years to recover the application fee. Ignore the total savings over the term of the mortgage it's a bit of a trick they play with you to convince you to move. I'd stay and repay as much as you can saving elsewhere as well and at the end of term repay as much as you want on the variable rate that they switch you to.