ending fixed rate early, or waiting for it to end and transferring to SVR?

cazj80

Hi,

I'm just wondering if anyone could give me a bit of advice please? I'm thinking through a couple of options with regards to our mortgage.

We fixed 4 years ago on a 5 year fix of 5.99% (at the time the interest rates were going up, and it seemed the best option at time, shame that it ended up proving otherwise!!)

Come 1/7/12, our early repayment charge will drop to £1000, if we want to change our interest rate. Incidentally, we're with the Halifax.

Now, we've paid just under 10% of our mortgage off this year as an early repayment, with no ERC to pay. We have some more savings, and we would like to pay a further 10% of our mortgage off (currently roughly £85,000 outstanding as of now).

I'm thinking of waiting until 1/7/12, then paying the £1000 ERC, setting us up on a lower interest rate, and then paying the further £8500 (10%) off, as Halifax have advised that if we were to switch to another product, we could make a further 10% early repayment straight away, rather than waiting a rolling 12 months from the last overpayment.

However, I would need to make sure that we would save at least £1000 within the first year to really make this worth our while.

The other option I'm thinking is just waiting until July 2013, when we come off our fixed rate, making an overpayment then, then possibly looking at fixing again.

I guess what I'm looking for is people's views of the pros and cons of either course of action. After fixing at nearly 6% and then seeing the interest rates drop substantially, I really don't want to be overpaying again, but then again, I don't know what will happen to interest rates by July 2013 and really would welcome people's opinions!

Hope this all makes sense!!

Joe_Bloggs

What is the next best thing you could do with the money. if you did not follow you plan ? What is the difference between the outcome of the current plan and that of any alternative ?

The Halifax don't have to lend to you their best available mortgages to an existing customer. I think they may make it a principle to be uncompetitive to those who can't fly but I can't be sure. You are probably better off elsewhere if you can stand up to the financial scrutiny of other lenders.

J_B.

opinions4u

What's the property worth?

What rate would Halifax offer you?

What rate could you get if you remortgaged elsewhere?

Within those questions you will find your answer.

cazj80

the only other thing we would do with the money is keep in it our ISAs/savings, we have no other debts that we could use the savings against, the only thing we owe is our mortgage.

We haven't had the property valued recently. It was valued 4 years ago by the Halifax at £140000 when we remortgaged, and a house in the same row as our sold last year for £120000, exactly the same as our house.

I think I need to wait until near 1/7/12 to find out exactly what rate the Halifax would lend to us at, then I can compare other banks etc.

I'm probably thinking too far ahead at the moment, just like to be prepared/have a vague idea of plans ahead!

Joe_Bloggs

There is an MSE Ultimate Mortgage Calculator that can make an estimation of whether it is worth switching and at what rate given fees etc.
J_B.