Should I switch my mortgage provider to clear my mortgage quicker?

Blue_grey

I have approx 33k left to pay on my mortgage and 2 years and six months left to pay it off. I want to reduce the term time on this and clear my mortgage quicker whilst paying the same amount I am currently paying each month. I currently have a fixed price mortgage deal with Santander at 5.65% which is due to expire in June of this year and I understand I can negotiate a new deal now. Would I be better to stick with Santander or shop around for a better mortgage deal and, if I go elsewhere would I incur additonal set up charges?
Any advice would be welcome! Thanks!

ACG

You would probably be best waiting until june before you actually swap, but you can speak to santander see what theyre offering and have a look what else you can find but if your trying to clear the mortgage in 2 years depending on what santanders SVR rate is you would most likely be best sticking to that - especially by the time you take into account arrangement fees etc.

phil_b_2

If you only have 33k left on the mortgage I'm guessing your LTV ratio is pretty darn good. With that in mind you would be eligible for the HSBC 1.99% above base rate fee-free trackers (which I's what I've gone for).
So basically the rate would be 2.49% with no mortgage fee, completion fee or even valuation fee.

Obviously no guarantee this deal will still be on the table when yours ends and you can switch but I'd bet there will be something similar.

5.65% doesn't sound so great at the mo.

getmore4less

I think you may have overestimated how quick you can pay this off and shorten the term by changing.

£33000 @ 5.65% over 2.5years(30 months) is £1182pm paying around £2463 in interest

If the interest rate was zero then the same payment would pay the loan off in 28 months saving that interest

So the best you can do is shorter by 2 months

The best deal around will be around 2.5% which is 29 months paying £1034 interest for a saving of £1430 over the 5.65% rate for term

Thats if you changed now probably with penalties.

whats the follow on rate of the current deal

In 6 months you will owe £26767 changing to 2.5 at that time and paying the same will save < £1k over the 5.65 rate

dimbo61

So what you need to do is find out what your mortgage reverts to at the end of the fix ?
See what Santander can offer you as an existing customer over the 2 years left on your mortgage or just drop onto the SVR and overpay whatever you can every month to be MF asap

oldtractor

cant you just overpay the existing mortgage?

phil_b_2

getmore4less wrote: »

In 6 months you will owe £26767 changing to 2.5 at that time and paying the same will save < £1k over the 5.65 rate

Or in other words will pay for a nice new solid oak floor in the lounge etc. Thats how I look at things like that .

Always worth a bit of effort to make a reasonable saving if it's genuinely on the table.

getmore4less

phil_b wrote: »

Or in other words will pay for a nice new solid oak floor in the lounge etc. Thats how I look at things like that .

Always worth a bit of effort to make a reasonable saving if it's genuinely on the table.

Thats the max saving, take of any fees to change and if the follow on rate is lower than 5.65% the saving will be even less.

A saving is a saving but it is important to know what this might be.

The OP goal was to finish the mortgage sooner, max this will be less than one months payment.

doublehubble

I have a mortgage (variable rate) with Halifax. It is currently 3.5% but it's going up to 3.99% on 1st May 2012. So, having seen an advert in the paper for HSBC mortgages, I phoned them, and (after an hour of answering laborious questions) was quoted a tracker mortgage at 2.69%. Obviously this rate can change, but as far as I'm concerned, 2.69 is much better than 3.99 at this moment in time, so switching seems the right decision for me.
Anyway, what I wanted to get across here is, I phoned Halifax to tell them I was switching to HSBC, and would they be prepared to match HSBC's rate, just to save me the hassle of switching and stay with Halifax. The advisor at Halifax very swiftly told me "No, we don't do that, we don't match other lenders". Fine, their loss! Bye Halifax, hello HSBC.