Can I remortgage and is it worth it?

KarenColling

Can I remortgage and is it worth it?

I am tying myself up in knots deliberating over my mortgage predicament......

I have 2 mortgages against my home. (One mortgage was 'ported' when I moved and I obtained another much larger mortgage to buy a bigger family home). The smaller mortgage is not an issue.

The larger mortgage is on a fixed term rate of 5.78% for another 6 1/2 years . When we took the mortgage out we couldn't afford the risk of the interest rates rising so fixed to ensure we were able to meet the payments. Early redemption would cost 3% which is approximately £4500. Our monthly payments are £930 .

I am completely torn as to what I should do next? Try and get a mortgage elsewhere on the basis that there are rates as low as 2.89% available (fixed for 3 years) which would reduce our monthly payments by £250 per month. Over 3 years that would be £9000 saved less £4500 ERC and an arrangement fee. However as I can't afford to pay the fee's upfront so the amount would be added to the mortgage....am I robbing Peter to pay Paul?

If the rates remained low past a 3 year fixed term the savings of reducing from a 5.78% mortgage rate to an approximate 3% rate for 6 1/2 years aren't far off £20,000!!

I know I had to take the fixed rate deal when I did 3 1/2 years ago or we wouldn't have had the courage to move (and probably wouldn't have been able to assure the mortgage lender we could afford the payments) but am now concerned that I am paying far more than I should be. ..... I would be grateful for comments/suggestions.

Both mortgages are with the Nationwide who I know are very competitive.:o

jimjames

I think the chances of rates remaining below 5.78% for the next 5 years are very high. From the recent news it has been suggested that the first rise in rates is unlikely before 2013 so getting a new deal may well be worth it.

getmore4less

Loads of missng info.


You will have to move all lending elsewhere.

why fix to a shorter term?

lowest cost tracker and overpay is an option to consider

you can't just use the payments to work out the relative costs you need to look at the capital outstanding

Thrugelmir

KarenColling wrote: »

However as I can't afford to pay the fee's upfront so the amount would be added to the mortgage....

Then your best option maybe to overpay this part of your mortgage instead. As you'll find it hard to achieve a return of this level on your savings without taking risk.