How much to come out of Fixed Rate deal?

icclebug

Hello everyone,

I am currently on a 5 year fixed rate mortgage with Nationwide, at 6.58%. My mortgage is currently £118k with the house value of £130k and I know I am paying over the odds at £817 per month.

A couple of questions:

1 - How much would it cost me to come out of the deal, I think the ERC is 5%?

2 - Could I then move onto the Standard Variable Rate after this?

I'd just like a few options really.

Thank you,

Richard

GMS

You are at just above 90% LTV so would struggle to get a deal elsewhere. Any new deal would involve fees and be of a similar interest rate assuming you had funds to reduce to 90% LTV.

If the ERC is 5% then you would be charged 5% of your balance plus any fees stated on your mortgage offer.

You are not really paying over the odds. If you are comparing the interest rate to base rate of 0.5% then dont. This is not a rate at which people can borrow. Even lenders borrow at higher than that.

You have a fixed rate protecting against any rises. You would be better overpaying as much as you can to brig your LTV down.

icclebug

Thanks, that makes sense.

So at the end of my deal (Sept 2013), presumably I would go onto the Nationwide's Standard Variable Rate which is probably a lot lower than I'm on now?

Just out of interest, I am a Director of a company therefore if I wanted to increase my mortgage and add some money in would I need accounts or am I classed as employed? The reason I ask is that we could do with moving to a bigger house, due to the family size increase!!

Thanks,

Richard

kingstreet

Directors with significant equity in the business would be treated like the self-employed and asked to produce accounts.

dimbo61

You already have a property with a LTV of 90% and if you want a bigger place you will need a bigger deposit to keep the LTV at 90% before you pay all the costs involved in moving!
As others have said you are better off by overpaying your existing mortgage and as you are with Nationwide they allow £500 a month OP,s so thats a good target to start with ( check with your lender)

cashandassetpoor

1 - How much would it cost me to come out of the deal, I think the ERC is 5%?

2 - Could I then move onto the Standard Variable Rate after this?

Nationwide do not currently allow in deal switching. Therefore you could only pay the ERC to leave the deal early and remortgage somewhere else.