What to do for the best please?

Kitkatkate_2

Hi there,

We have a fixed rate mortgage of £167,999 and our current monthly payments are £800 - for interest only. Our deal with Santander is due to end at the end of May. We are keen to move to a repayment mortgage - now that interest rates are considerably lower than when we took out the mortgage 3 years ago.

We started shopping around online last night, and can see some fairly reasonable deals. However, our concern is that we still have some time to go before we come to the end of our deal, and that interest rates, and therefore offers, will go up in next few weeks - making it impossible for us to switch to the repayment option and keeping our payments about the same as they are now.

My boyfriend has suggested paying it off early - but the early repayment charge is approx £5,225 - which seems huge to me. He wonders about putting this onto his credit card, and then borrowing £5,000 more from the new mortgage lender and using it to pay the credit card off. This means we then have a higher mortgage to repay - but at lower rates potentially making the payments the same.

To be honest, I am getting all in a muddle with what is the best to do - a) sit and wait and see what's available in 3-4 months time b) go ahead and book something in now, and pay Santander the £5k and add it to new mortgage c) carry on on interest only.

Can anyone offer any advice please?

Many thanks

Kate
x

TrickyDicky101

Mortgage deals (assuming you have paid the arrangement fee) typically remain available for 3 to 6 months so depending on the deal and who it is with you can quite possibly book it now and then take out the remortgage in 5 months' time when your existing deal ends. You shouldn't be considering paying off the ERC - it is very large and is completely avoidable if you book a deal which will still be valid in 5 months' time.

CloudCuckooLand

Research for the next month, get to within 3 months of your deal ending, then reserve a deal...

Do not add £5k to your mortgage.

peld

the BoE interest rate is an unknown at the moment - the recent GDP stats would suggest a rise is probably unlikely, although high inflation probably suggests a rise! Given £5k is a lot of money to end a deal just a few months early, its probably better to wait a couple of months, then speak to Santander to see if you can "book" your new deal when the current one ends.