Advice required please.

Dullville

Would welcome some advice on behalf on my sister please.
Are there any better options to cut her mortgage payment or reduce term paying the same available to her ref remortgaging?
Figures below are as of 1st January 2013(last statement)

Remaining mortgage term 9years 1 months.

10 year fix at 6.99 finishing November 2016.

Monthly payment of £573.50

ERC as of Jan 2013 was £3661(but will be less obviously today)

Remaining mortgage as of Jan 2013 £45766

House is worth approx 210k

Is it worth her just sticking it out till the end of fixed rate period or can worthwhile savings be made if she switches mortgage?
She could also afford a slightly bigger repayment each month.

Thanks in advance.

GMS

Mortgage is relatively small and over a short term so reduced rate will not have the impact you may expect.

Really need to look at figures carefully and see if paying ERC can be justified.

ACG

Ive just done some very quick sums ...

I added the ERC to the balance and did a mortgage of £49k over 9 years. Repayments would be approx £490. That doesnt include and application fees being paid though - there probably isnt much in it one way or the other to be honest.

GMS

You need to know what rate you are looking at. No point going for the lowest 2 year fixed for example as the revert rate after 2 years could be the same as paying now.

The ERC needs to be justified so a fixed rate is the only real way to know it can be done. Then it needs to be a longer term fixed which has a higher rate than a short term.

Then look at arrangement/valuation/admin fees.

No point in cutting payments for 2 years at a cost of £3661 ERC.

amnblog

Paying 8% to reduce the rate over just over 3 years.

The maths work, but that is just one consideration.

Why did she take a 10 year fix in the first place?

amnblog

Should have said the maths just about work

JimmyTheWig

Dullville wrote: »

Figures below are as of 1st January 2013(last statement)

Remaining mortgage term 9years 1 months.

10 year fix at 6.99 finishing November 2016.

Monthly payment of £573.50

ERC as of Jan 2013 was £3661(but will be less obviously today)

Remaining mortgage as of Jan 2013 £45766

House is worth approx 210k

With that loan to value (i.e. the amount of the mortgage is low compared to the value of the house) then, assuming she has a decent credit record and enough income to cover it, she'll be looking at the best mortgage deals around.
Don't just look at getting the best interest rate. Particularly in cases like this where the mortgage is small, any fees can have a great impact. Your sister is probably best going for a fee-free deal, even if that bumps the interest rate up a little.

I'm not a broker so don't have access to a range of deals, but picking Santander as a random bank she could get a 3 year fix at 3.19% with no fees (assuming that she isn't with them currently).
I've picked three years as that keeps a similar product end date that she currently has.
This would save your sister around £4700 in interest over the three years.
Which means, having paid out the ERC, she'd be £1000 better off.

A broker should be able to find a better rate than I've just pulled out at random, so I'd say it is definitely worth doing.

Once she has found the deal she wants she should set the term of the mortgage so that the monthly repayment matches what she wants to pay (a little more than she is paying now, presumably, from what you say). So she should be able to get it down to 8 years.

Dullville

amnblog wrote: »

Paying 8% to reduce the rate over just over 3 years.

The maths work, but that is just one consideration.

Why did she take a 10 year fix in the first place?

Ref why 10 year fix..she liked the idea of knowing how much she would be paying for 10 years and she doesn't like the hassle of remortgaging every 2 years!