Ditch my fix?

EddyP82

Hi,
Hope you ladies and gents might be able to help me, I'm currently in a 5 year fixed at 5.34 % with Nationwide.
I've just had my annual statement come through and heres teh details:

Closing balance - £83,712
Early repayment charge - £2,500
Redemption admin fee £90.00
5 year fixed will expire on 31st August 2012

So with the news today of interest rates potentially going up, it's making me think if I should ditch the fix now to grab a potentially lower rate than I will get next year, or is this just a gamble?

What do you all think please?

Thanks

Thrugelmir

In order to comment. What is the market value of your house?

EddyP82

Approximatley £220k, maybe 230k, I paid 198k 3.5 years ago, but since then have built a large extension which has practically doubled the size of the house, haven't had it revalued since.

EddyP82

Anyone help please?

Georgie4

It will depend on the LTV you need and whether you intend staying with existing lender as sometimes the best deals with a new lender have a high aplication fee so this needs to be factored in as well

somethingcorporate

The ERC is a hefty % of your mortgage balance and your rate seems quite reasonable. Unless you can get a significantly better rate over a long term I doubt you would see a financial benefit.

I would use what you would put into the ERC as an overpayment (if you can) and concentrate on continuing to build up savings / lower mortgage (depending on OP allowance).

You can reserve a mortgage 3-6 months in advance (depending on lender) so I would give it a year and see where we are.

This is what I would do but all these things are a gamble.

getmore4less

If you go onto the nationwide base+2% tracker rate I would keep what you have.

michaelwr

I think I would move now as it is certain the rates are to rise over that period. I would just try to consider what you are committed to paying now in a higher rate/redemption fee will be recouped by the better deal, unless Nationwide can offer a better deal to keep the business - which I don't think they would.

You need to work on the detail but I would say redemption fees normally drop 1%/year so if possible try and bag a deal in the next month or two that can be held till August when your redemption figure drops. Say something like HSBC 3,99% for 5y £99 fee for your LTV. You would save 1.35%/year and hopefully cover the redemption but you still have 3+ years of benefit.