Re-mortgage while in fixed term?

5t3ve

Hi All,

I'm looking for some quick advice regarding my fixed term mortgage.

Current Situation:
- 5 year fixed term mortgage at 4.39%
- Outstanding balance: £109,375.45
- Flat value at purchase 2 years ago: £210,000
- Fixed term ends 1st May 2016

I've seen HSBC are currently offering a 5 year fixed term mortgage at 2.99%. It hurts to know that I'm currently paying 1.4% over this a month (which equates to approx £88 monthly I believe).

If I were to redeem my mortgage early, there would be an early repayment charge of £3,447.27 (as of March 2013).

My question is: Is it worth me asking HSBC whether I could switch to the new 5 year fixed rate they are offering? And will it work out financially considering the charges?

Thanks in advance.

opinions4u

You could ask them.

But they probably wouldn't agree to it.

So you'd have to find another lender.

5t3ve

I've done some really basic calculations:

- If I continue to pay my mortgage as I am now, I'll have £96,278.52 remaining April 2016

- If I switch to the 2.99% deal, in April 2016 I'll have: £91,881.51 remaining.

Thats a difference of £4,397.02, but without the charge of £3,447.27.

Including the charge, I'm still better off by £949.75 and it'll mean I have another couple of years of security at 2.99%.

Seems like a no brainer to me.. thoughts?

Thrugelmir

5t3ve wrote: »

Seems like a no brainer to me.. thoughts?

As O4U says HSBC are under no obligation to offer the new product.

No harm in asking though.

Do both products have the same follow on rates?

dimbo61

well the ERC is £3447.27 plus the exit fee from your current lender maybe £300? ( please check)
Are you getting free legals, survey and Fee Free?
You will still have to pay for searches and other costs.
Not sure about this !! have you got £3447 spare ? or will you add the ERC and other costs onto the loan amount.
maybe if you have a spare £4000 why not just overpay your existing mortgage

Yorkie1

Are you with HSBC at present?

Most lenders don't allow you to switch from one fixed term product (during the term) to another product. So, if you are with HSBC now, your idea is likely to be a non-starter.

However, only HSBC will be able to tell you if they would allow you to change products. Does the new product have an arrangement fee? Does it have free legals and valuation? If it has a fee, or no free legals / valuation, then your maths needs to be rejigged even if they do allow you to swap.

5t3ve

I've had a quick look online, there's an option with HSBC to 'Switch Mortgage'.

This seems to indicate that the only charge would be the £3447 (It's a fee free mortgage), and I presume there'd be no other fee's as the mortgage will be on the property they already lent me money on..

Hmmm..

Goldiegirl

Is the 2.99 rate for new customers or existing customers?

If it's new customers only, they wouldn't allow an existing customer to switch to that rate

5t3ve

The 2.99 rate was selectable online when shown my offers, so I'd presume it's for both new and existing.

If not, there's another 5 year fixed at 3.19% for existing customers. I think I need to pop in and have a chat with them as this could save me a fair bit on interest payments if it works out!