Changing mortgage for a better rate

qaws

Hi all,
I'm thinking of switching my mortgage, just wanted someone else to read over to see if there's anything I've missed.

Current: Offset mortgage, £10,00 in the attached savings account, 23 years left, 4.49% applied rate, £96,100 owing. Monthly payment=£564, and the savings pays an extra £43 or so in monthly interest which comes straight off the capital. No early repayment fees.

What I'm thinking: Flex (linked to the base rate), current applied rate 2.79% for 5 years (then it switches to 4.49%), same term (APR is 2.9%). Monthly payment=£473, and I would overpay by £90 (so I'll still be paying £564), and then put the £10,000 in a 3% savings account and pay the monthly interest (about £30) off the capital - in effect overpaying each month by £120. £1000 set-up fee. No early repayment fees.

The mortgage calculator on this site calculates the offset mortgage to be paid back in something like 18.5 years, and the Flex mortgage to be paid off in 16. The new one switches to another rate after 5 years (4.49%), but I can switch mortgage again at this time since there's no early repayment charges - I suppose I would have to weigh up paying set-up fees every 5 years, since that would be losing £2000 if I do it 2 more times. There's another very similar one, no set up fees but at 3.1% APR.

Does this all sound sensible? Looks like I can be mortgage free in 16 years instead of 23. Anything I've missed? The mortgages are with my current provider.

Thanks.

Phelpsie001

The base rate is bound to rise before long so please budget for that if you are on a flexible tracker mortgage!! I don't know the ins and outs, but would it be worth just paying that £1000 off your current mortgage, rather than switching?

Just a thought!!

kingster2069

Hi qaws, welcome to the forum. Can you let us know your LTV as there might be better deals depending on how much equity you have in your home. For example I know HSBC are offering a fee free life time tracker at 1.89% above base, currently 2.39%. This rate plus your £1000 should reduce your term by almost a year and no need to remortgage.
I would highlight what Phelpsie001 said about rate rising, the HSBC has no exit fees which is nice. But I think the likely rise in rates is likely to extend your repayment period unless you can afford to increase your payments.
It looks like your doing all the right calculations, remember if you can bet your mortgage rate in a saving account, then it's better OP into a saving account until rates rise.

dimbo61

Lots of things to check out carefully the HSBC tracker deals only allow 20% of monthly amount as overpayments!
Any money earned in normal savings account would be taxed!! so earning less than money in the offset.
You have already reduced the mortgage down to 18 1/2 years and if you had a £1000 pounds to throw at it now would it be nearer 16 1/2 ?
Is the current deal fixed ?
You are already paying 4.49% and YBS have 5 year fixed offsets at 4.59% so you have security for the next 5 years no matter what happens to interest rates !