Remortgaging sanity check

Ionkontrol

Hi,

Property value = £300,000
Mortgage balance = £54,000
LTV = 20%

I currently have 2 years left of a 5 year fix @ 5.6% with the Co-op.
It will cost £1000 in early redemption fees to exit this.
At present I overpay by £200 a month.

I have been looking at HSBC Lifetime Tracker Special @ 2.3% APR, which has £400 of fees to setup.
So, even though to change to the tracker it will cost me £1400 in fees, I reckon I will be better off in the long term.

As I have only 6 years to go, does this seem like the best option for the remainder of my mortgage term?

Thanks in advance.

kingstreet

I wouldn't, personally.

You only have a short time left, so there is no long term strategy required.

As things stand, the interest on your mortgage is £252 per month.

Changing to the new deal will reduce that to £103 per month.

Add to that the fees, spread over the two years left on the fix, that's £58, making £161 per month.

A 2% change in interest rates will push your monthly payments, including the amortised fees, over the £252 you are paying now.

I reckon the £1,400 is better off as extra overpayments, rather than fees to lenders. You can look at this again in two years when I expect a similar product to still be available, albeit with a higher BoE base rate to start with or you can see what Co-Op has available, possibly fee-free.

Others may disagree. I don't like fees on small mortgages and small terms.

dimbo61

Can you up your overpayments ? without paying ERC,s ?
If not build up savings in cash ISA,s and read what the mortgage reverts to at the end of the fix SVR ?