Should I remortgage & pay ERC fees?

Lubo27

Hi

I would be grateful for a little advice, thoughts etc on what I should do in regards to my mortgage.

My husband and I took out a 10 year fixed mortgage in 2004. At that time there were indications interest rates were going up and we knew that this 10 year period would be tight on one income due to having children so we wanted a fixed amount that we could manage each month. We definitely didn't win on that score as interest rates have been so low!!!

We have 3 years left on our fixed rate of 5.14. The ERC is £2,521.06 and our mortgage is £60,284.80. We have 23 years left on mortgage.

Should we switch now & pay the ERC. I have done the ditch my fix on the mortgage calculator and it said that any new mortgage would have to be less that 3.3 % consistently. Does that mean it would be 3.3% for the next 20 so years?!!! Interest rates are going to go up again soon so if we go for trackers then we could find ourselves in a worse situation.

Thanks in advance

frugalfreda

Hi

I am not qualified to answer your question but my instinct would be to stay put but that's just me. I can see where you are coming from as 5.14% seems very high at present but I think you got a good rate for a 10 year fix - I was expecting you to say 6-7% when I started to read your message. You will also need to factor in potential fees if you remortgage - I am thinking of going the other way from a tracker to fix(!) and I am going to have to potentially pay out £99 for booking fee, £200 valuation fee and £295 redemption/admin fee from my current lender.

If you stayed put, do you have any flexiblity to perhaps make small overpayments as your term is quite long?

CloudCuckooLand

It was 4 years before rates fell to where they are, so you did well to fix in 2004. Ok the last two years or so have been the reverse, but in another years time you could have to pay another fee to book a fixed product if rates do move back up...

Doubtful you would make £2,500 ERC back on such a small mortgage, even if rates were stubbornly low.

You wanted certainty, you got it and still have it. Enjoy it, rather than have to watch for the time to jump off a tracker.

Lubo27

Thanks for thoughts on this. We can and have been thinking about paying extra each month to bring mortgage term down.

We have some money coming to us through redundancy so will probably use some of that.

Burridge60

Lubo27 wrote: »

We have some money coming to us through redundancy so will probably use some of that.

I hope you took out some redundancy cover as you wont be able to buy it now. Have you got a new job to pay the mortgage?

Have you seen how much ten year fixed rates cost now? If you can even get one.

I would say this is quite cheap and that you have done very well when the rates were high in the last seven years.

You haven't had to pay £999 every two years either to renew a fixed rate even though you might have been at a lower rate some of the time.