Santander mortgage - help and advise needed pls

Lord_Isleworth

Hi - need some advice/feedback.
I have posted on here about having a large ECR 0f 7k on a Sanatander fix of 5.79 taken out three years ago. Current property worth 310k. This deal is due to finish March 2013. I type this against a backdrop of yet more economic data saying interest rates just have to remain low for 12 months at least.
I have rung them today (Santander) and I can switch to a 2.79% 2 year tracker tracker with no fee and £150 arrangement fee. Other deals offered but one cost £799 and another £1299 for slightly lower rate. The 7k ECR would get added to loan and we'd have 183k to pay and a mortgage term of 14 yrs 8 months left to go.
So what do you think?
If we paid 7k to leave now could i go to ING or HSBC offset deal and not have to pay 7k the bank, ie could I move the 183k loan which includees the high ECR fee or would the ECR be settled seperately? Also we have paid 40k in last two years on top of the interest only agreement and had planned to pay 18k more in Jan 2012. We are doing this because we moved from London to sussex and took on a smaller house.
Another question if santander switch us could i over pay say £12k now and another £12k in jan because this is a new deal or would the fact i overpaid 20k in jan this year on the 5.79 fix deal still count?
Thanks in advance
Jon

Thrugelmir

Are you limited in the overpayments you are allowed to make?

Lord_Isleworth

Thanks for reply. On the 5 yr fix we can overpay 10% of loan.
I suppose the main issue we have is whether the 7k redemption is worth it.
If our interest only repayments anount to £400 and we overpay £400 for a year this is only £4800 and the redemption now is 7k. We would be losing money in effect. If we sit tight for a year and then move (assuming we can and the interest rates are still low this time next year) we wouldn't have to pay 7k.
The move now though would allow us to have more money each month and what's to say the bank won't let us leave 8 months early this time next year?
I really am fed up thinking about what is best to do......

JimmyTheWig

Just depends what you think rates are going to do over the next two years.
If the tracker stays at 2.79% then you'd make your 7k ERC back in 16 months. That would then give you 5 months of lower interest before your fix would have run out in March 2013. So you'll save money.
If rates go up by 1% in a years time then it would take 18 months to get your 7k back, giving you only 3 months of lower interest.
And if rates go up by 1% in 6 months time then you'd break even by March 2013.


Personally I would be looking to swap onto a long term fix. They offered us 4.24% fix for 5 years at the end of last year as a follow on deal. We bit their hand off to take it. But we didn't have ERCs to pay. For you, this rate wouldn't be worth it unless you want to pay for the surity if having this (comparatively) low rate way past March 2013.

Lord_Isleworth

Is an offset mortgage a better way to go? we could have 32k set aside in that account so we'd have an 183k mortgage but the interest would be worked out on 151k. Are there any really good offsets people would recommend?

Jon