Should we exit early and remortgage?

savingsaving

Hi all,

I'm just after a bit of friendly advice!

My OH and I bought our house, a renovation project, a year ago on a 2-yr fix at 90% LTV. We have invested a further £20k into the reonvation via a fixed-term loan, and work is shortly to be completed. We have extended and added quite a bit of value to the house (we hope! :-)) when compared to properties currently both selling and on the market in our street. Using these prices as a guide, our LTV on the finished house by comparison will now be around 65% LTV.

We are not intending to sell, rather, stay here for approx 5 years. Our monthly outgoings on a 90% mortgage plus the loan repayment on the £20k are now far more excessive than rates ona 5-yr fix for a 70% LTV mortgage (which is the LTV if we bundle in the loan spent.).

Our early repayment penalty in less than 1yr of the fix period is 1%. , and of course, if we were to remortgage, these figures are all subject to valuation of the property.

This may be a daft question, but are we best to remortgage on a better deal, and pay the early repayment penalty? In clearing our debt and lowering our mortgage repayment we would be approx £370 pcm better off, which negates the cost of the early repayment penalty in much less than a year.

I am keen to do it, but my OH is somewhat risk adverse, and seems to see this as illogical? To me it's quite straightforward, but I'm worried I'm missing something?

I should add, we're also getting married in October, and the month-on-month savings would all help going in the pot! :-)

Thoughts very welcomed.

The_J

It's a fairly complex calculation if you throw capital erosion into the mix so you should speak to a broker.

It sounds like it could be worth it though so definitely check it out.