Stuck on a high fixed rate until march 2013

bkal1

Hi Folks

Can anyone help. Bit confused about what to do. I am currently stuck on a fixed rate of 6.2% with Nationwide and have been for some time...very distressing!:( (I fixed when every thought rates would go through the roof before the credit crunch).

The term on the fixed product is until summer 2013 and early repayment charges are likely to be £3550. Everywhere I look on various calculators it seems to suggest that I would be better off sticking with the existing mortgage products. Surely this cant be the case if carry on making the same payments at lower rates?

Let me know what you think.

Thanks

Peelerfart

I think,given the information avaiable that the calculators have no reason to lie.

Sorry OP

dimbo61

As you are with Natiowide they allow most borrowers to overpay the mortgage by upto £500 a month!
So best thing to do is overpay as it saves you 6.2% TAX FREE

Radionotme

As above really, I'm in a similar situation, paying 5.98% interest while those around me on trackers have been laughing all the way to the bank for the last few years.
I'm looking forward to summer this year, when I finish the 5 year fix, and finally drop onto the SVR, at 2% above BoE rate. Although rates will rise at some point in the future, it'll take a while before they get back to what's considered normal, and I plan to reduce the capital by then so that it's not as much of an impact.

I looked at paying the early redemption penalty a while back, but when combined with the tighter lending restrictions, I wasn't going to be much better off, and I'd lose that SVR follow-on rate.

Wh05apk

Although you have not given your loan to value, or mortgage amount, it is unlikely that with 18 months left to run, you will save enough to justify the penalty, if you want to let us know your mortgage/property value, we may be able to indicate whether it would be worth you changing.

latecomer

We're stuck on a 5 year fixed of 5.39% which ends in 13 months and with the Early Redemption charges (tiered from 6% downto to 2%) its never been worth changing lenders. Its the price you pay for have a fixed rate - if the rates had gone up you'd have been laughing.

property.advert

I believe the picture to be slightly more complex.

The OPs actions show he is risk averse so the idea of fixing going forward must be attractive. So what numbers do we have ?

Current mortgage rate 6.2%
Repayment charge £3550.
Size of mortgage ?
If £3,550 represents a charge of 2% then the mortgage is £177,500
If £3,550 represents a charge of 4% then the mortgage is £88,750

So if it was £177,500 @ 6.2% then interest is £917 per month
Remortgage at 2.5% interest is £370 per month
Difference is £547 per month and repayment charge is repaid in 7 months.

Moving to a new 5 year fixed rate of 3.39% gives a repayment of £501 per month
Difference is £416 per month and repayment charge is repaid in 9 months.

So whichever way you look at it, paying the repayment charge is good business now and would probably have saved the OP many more thousands over the last few years had they put the figures down on paper.

For the lower mortgage amount, half the savings and double the repayment period. Adjust to fit the actual amount owed.

property.advert

latecomer wrote: »

We're stuck on a 5 year fixed of 5.39% which ends in 13 months and with the Early Redemption charges (tiered from 6% downto to 2%) its never been worth changing lenders. Its the price you pay for have a fixed rate - if the rates had gone up you'd have been laughing.

Do the maths based on real world new mortgage rate (not just your current supplier) figures and you might find it is worth paying the charge.

GSXRCarlos

with respect, you signed up to a product that offered you some security 3 or 5 years ago, i can understand the need to ditch and switch if it will make/save you money - but i get the feeling that you want out because others are making money.

I fixed 2.5 years ago at 6.07 and i'm currently repaying £400/month - it gave me the security i was looking for in a volatile market, and was and always has been "affordable" - just my 2 cents