Re-mortgage early repayment charge

willnoz

Hi everyone, Just interested on opinions regarding a remortgage.

I'm in the last 18 months of a 5 year fixed rate deal with an interest rate of 5.5%. The early repayment charge comes to about £8k on this mortgage.

Looking at the deals on offer at the moment I can get on a new 5 year fixed rate deal at around 2.8%-3%. So with the balance that is owing on the mortgate and rolling in the £8k early repayment charge I can reduce my monthly mortgate payment by around £300. Whilst we just about cope financially we are a bit stretched at the moment with 2 kids in nursery, no real pay rise for a couple of years etc etc.

I'm just wondering on the whether it makes good sense financially to remortgage now or is the sensible option to try and wait out another 18months and avoid the repayment charge, ignoring personal circumstances is this financially daft or prudent?

All opinions gratefully received.

amnblog

Pay £8,000 to save under £300pm for 18 months (under £5,400).

If your tight cashflow means this is attractive to you then you have a problem with your budgeting that needs addressing.

willnoz

amnblog wrote: »

Pay £8,000 to save under £300pm for 18 months (under £5,400).

If your tight cashflow means this is attractive to you then you have a problem with your budgeting that needs addressing.

What do you mean about budgeting? The extra 300 per month does make a big difference to me right now, I want to enjoy my life rather than scrimp all the time.

My other concern is that these attractive fixed rate deals won't be around in 18 months time, so I can secure this low rate now, or end up paying more in 18 months time for the next 5 years.

amnblog

Have you asked your current lender if they will offer you a new medium term fixed rate and waive the early redemption penalty?

We have seen some do it.

pennypinching77

That's interesting amnblog as I am in a similar position to the OP.
My 5 year fixed rate comes to an end in Feb 1st 2014 and have been in a 5 year 5.19 deal with The Halifax.
I don't suppose they are one of the banks that may offer that deal? Will try and find out.
I will ask but at the same time am wondering if it is risky to ask for a small amount onto of the mortgage about 8k for home improvements before we sell it. Or just try and borrow it elsewhere and leave the mortgage.
The penalty before Jan 31st 14 will be £4229

Thrugelmir

willnoz wrote: »

My other concern is that these attractive fixed rate deals won't be around in 18 months time, so I can secure this low rate now, or end up paying more in 18 months time for the next 5 years.

Putting the possible financial benefits aside for a moment.

What product are you considering? As in many instances there are costs to be paid on remortgaging to a new lender.

willnoz

I have asked about waiving the early redemeption charge if I take out a new mortgage with them (The Nottingham) and they have said a point blank no, although they are offering a pretty good 5 year fixed mortgage so if they can do anything I would stay with them for another 5 years. If I can be reasonably confident of still being able to get a good deal in 18 months time I may try to wait it out. Looks positive for low interest rates for a while longer based on B0fE comments, but I don't know enought about this kind of thing to understand where mortgages wil be in 18 months.