Interest Only mortgage, fixed term and Early redemption charges

bp1234

Hi

I am being a bit thick and was hoping someone could help;

We are 17 months into a 36 month fixed term IO mortgage. We want to sell but will suffer an ERC of £4200!

If we wait until the term has expired and we are free to redeem the mortgage without charge we will have paid roughly a further £14,250 in interest (19 months x £750 monthly interest payments).

To my mind we are better off by some £10k if we sell now and take the ERC hit rather than keep paying interest until the end of the fixed rate term.

Our move is not dependent on the sale but cashflow wise it will be a necessity once we do move!

am i missing something obvious as to why we would not sell now?!?!?

huge thank you in advance!!

Thrugelmir

bp1234 wrote: »

To my mind we are better off by some £10k if we sell now and take the ERC hit rather than keep paying interest until the end of the fixed rate term.

Cheaper deal elsewhere?

bp1234

Thrugelmir wrote: »

Cheaper deal elsewhere?

Thanks, probably not clear i should have said we don't have to sell this flat to move (as we'd rely on the letting income when we move), we are buying another house but our preference is to sell this flat to reduce our mortgage on the new house at some point but will incur over 4K ERC if we sell it now, so wasn't sure whether best to carry on paying the interest only part of the mortgage (although not paying off any captial) now at £700per month and sell at the end of it's term in 18 months or just bail out and pay the ERC and put the money into the other house.

does that make sense?

Thrugelmir

Have you asked if you can port the mortgage to the new property?

bp1234

Thrugelmir wrote: »

Have you asked if you can port the mortgage to the new property?

We have had to say we are cash buyers to get the house we want, buyer wanted to sell asap, the house is worth it for us ie its chain free, in the area we want and school places sort of rely on the move etc and we can just manage it by remortgaging etc. however am wondering whether we sell the flat we're in (pay the £4K erc) and as soon as it goes put the money into the new mortgage when possible or hold onto the flat, rent it, and pay the £700 interest only payments and gain an extra £700 in income.

please say i am making sense and thank you.

Thrugelmir

bp1234 wrote: »

and we can just manage it by remortgaging etc.

Have you had his confirmed. Or just an idea?