Remortgage help

rats

I have a fixed rate of 4.59 until May next year. There is a penalty for early repayment of over £2500. I am concerned about the interest rates rising and wonder would it be prudent to look at a new fixed rate now or wait till next may.

UK007BullDog

You have to consider the costs of a new mortgage deal and the costs of leaving early and if you are then still better off.

As the rates are going up it might no longer be suitable for you to change now.

Only you will know once you have done the maths. I mean May next year is still nearly 1 1/2 years away. Rates might even drop. Currently just relax that at least you are now fixed at a decent rate.

I am in the same shoes as you. I will not change right now and hope to get the best deal available then, I am also overpaying which helps a little.

Martinslovechild

You haven't stated the size of your current mortgage, but as UK007BullDog has suggested, you really need to do the maths. If you assume that there will be a couple more rate rises, then this would cost you in the region of £16 per month per quarter percent per £100,000 outstanding, i.e. £192 per annum for one rate rise, or £384 per annum for two rises.

This is certainly far less than the £2500 redemption penalty that you would face by swapping.

Of course, if your mortgage is much larger than £100K, or there are lots more interest rate rises to come, then this could cost you a fair bit but it's still likely to be less than £2500.

rats

The current mortgage has £79703 owing. I didnt consider overpaying, which we can do up to 10% per year.

Martinslovechild

OK, so a rate rise costs you approximately £12.80 per quarter percent (£153.60 per annum). You would require more than 16 quarter-percent rate rises to occur costs greater than £2500 per annum, at which time Bank Rate would be 9.25% and the average mortgage rate around 10.25%.

At this level, we'd probably be well into economic clapse and a housing crash, so I think you'll be fine staying with your existing deal for now.