Advice re swapping one fixed rate for another

mkbswimstar

Please help, I am confused as hell.
Current mtg - £154000, paying 5.69% fixed for another 1yr 10months. ERC at present £4600. Current payment (int only) £728.

Other deal - 5yr fxd 3.69%, £999 fee, free legals and val.
Int only £485, repayment £884.
Can afford the £884 and want mortgage to go down!

But by doing this we are adding the £999 fee and the ERC of £4600 to the £154k we already owe.

Do we do it and finally go on repayment and enjoy a nice low 5yr fxd rate or do we wait 1yr 10 months and therefore not have to pay the £4600 fee, but rates may have gone up.

Which is best financially?

Thrugelmir

Are you allowed to overpay on your existing mortgage?

mkbswimstar

Yes we can overpay, but the difference if we stayed with present mortgage (compared to lower rate on repayment) would be £160 a month being repaid. Is it worth it?
Really clueless about this.

Thrugelmir

Downside is you adding £5,600 to your mortgage balance.

Personally I would overpay the existing by the £156 difference.

Plus thoroughly review the household finances and see what other savings could be scrapped together to increase the overpayment.

These little point in worrying about interest rates. As when they change could be anytime. So better to focus on what you can control and that is the amount you owe.

By reducing the capital balance this may help you achieve a better LTV when your existing product comes to the end of its term.

Hope this has helped and given some food for thought.

dimbo61

If you went on the 3.69% fix for 5 years you would still owe £133,283 in 5 years time and thats without taking into account the other costs to move ( exit fees, legals,searches,surveys,chaps fees, ETC)

mkbswimstar

In 2 years time if we carry on as we are we will still owe the full amount, if we switch to the new deal and repayment (because we can afford to on the new deal) we will be 20k down in 5 years. Free val and legals.
Still the £1k fee and erc of £4k though to think of.
I can see what u guys are saying, but still need advice, please.

getmore4less

Whats the follow on rate of both these deals?

You need to look at those before you can decide which is best long term.
Many cuurent deals have good follow on rates which are worth keeping.

any way can you reciver the fees i 1 y 10 months that the main do I switch.

1: £154000 @ 5.69%

add fees

2: £158700 @ 3.69%

Use your number pay £884 on both deals and in 1y 10m

1: £150,442.88
2: £149,700.92

Looks like you recover the fees and are £700+ better off.