Remortgage from fix to variable?

JoJoArmani

Hi

I've been looking around and I think it would be a good idea to remortage to a variable/tracker. I think I probably should have done this a year ago but never mind ;-)

Current loan o/s is approx £40k inc ERC etc on property valued approx £135k.

Currently on Nationwide fixed 5.63% with 2 years still to run on the fix - then a further 15 years still to pay. (17 years in total - Omg!)

We pay £298.96 a month and want to remain paying approx £300 pm.

I have a £1500 overdraft that I would love to clear so am thinking of remortaging for approx £42k.

With us having a small mortgage I really don't want to pay big fees for arrange a new deal. I was looking at HSBC as they seem to have very low rates.

But I am wary of going to what I see as a "high street bank" as historically they have always seemed to be expensive so it seems to good to be true.

What do you think??

Helsen

Hi

I am in the process of re-mortgaging from my fixed 5.69 rate to tracker at HSBC at 2.49 + base (no fees). I'm also paying an ERC as had 7 months left even if the base rate increases I will still save (even taking into account the ERC), although my mortgage is 100k. Got the paperwork today.

Thrugelmir

Factoring in all the costs of remortgaging. Firstly I would review the household budget to see what savings could be made to start reducing the overdraft.

Consolidating another £2k of debt over another 17 years doesn't do you any favours. As over time you won't feel any better off. If money is already tight.

JoJoArmani

Thanks for your replies.

I have a fairly tight budget yes, I have reviewed all the figures and there is not much room to reduce the overdaft as there is no spare cash to save at this exact moment, however.....

My boss has promised me a pay review soon as I take on a new role. And come September I will only have 1 child in nursery so will save there. Also I am reducing their nursery to 3 days a week from July - Sept to make substantial savings on fees. (Since the government cut the max to 70% fees I am nearly £100 less well off a month. Which is the main reason money is so tight.)

We both work hard but on low wages. We are very lucky to have such a small mortgage. But I would love to cut the term a bit so I can look forward to my 50's ;-)

I know borrowing on a mortgage is an expensive debt - but at the moment the only other way to rid myself of this overdraft is to cash in my share plan which is worth about £1700, and is the only big saving I have left. (when the overdraft is gone I will be at least £20 p/m better off saving on fees/interest etc).

Joe_Bloggs

The quest to get the most for your money is a continuing one. It might not be worth the effort to re-mortgage if it only saves 64p per day. Nationwide's rate is poor but the benefit will be Bank of England rate plus 2% in the future when on BMR.

J_B.

MarkyMarkD

Helsen wrote: »

Hi

I am in the process of re-mortgaging from my fixed 5.69 rate to tracker at HSBC at 2.49 + base (no fees). I'm also paying an ERC as had 7 months left even if the base rate increases I will still save (even taking into account the ERC), although my mortgage is 100k. Got the paperwork today.

I don't think your maths are right, Helsen.

It reads that your saving is 2.70% for 7 months - just 1.575% - which is around half of a typical ERC of 3%.

And a standard Nationwide revert rate is 2.50%, which is lower than 2.99%, so you will be losing out after the 7 months of the fix expires too.

JoJoArmani

I thought the HSBC one that tracks at 1.89% would be better than the Nationwide 2% - seeing as I would have to wait a further 2 years to qualify for the 2% as well?

Looking at HSBC website I get these figures
£pmth Term Loan
£251 17y £42,000 Being naughty and clearing the o/draft
£278 15y £42,000

£239 17y £40,000
£265 15y £40,000

I know we are tight money wise now but things are set to improve over the summer with the nursery cuts saving us approx £70 per month then £120 per month come September. And, my impending pay review - not mega bucks but better than nothing.

Am I on the right lines?

Helsen

MarkyMarkD wrote: »

I don't think your maths are right, Helsen.

It reads that your saving is 2.70% for 7 months - just 1.575% - which is around half of a typical ERC of 3%.

And a standard Nationwide revert rate is 2.50%, which is lower than 2.99%, so you will be losing out after the 7 months of the fix expires too.

My fixed revert rate is currently 4% (if had been 2.5% then fair enough), my ERC is around £420 ( i would not even consider if had 3% ERC), i will also be making significant over payments each month (which i am not able to do in my current fix)

dunstonh

I seem to recall past posts that say Nationwide will not allow you to switch onto their SVR, even if you pay the charges.