Remortgaging .... Should we, shouldn't we?

jstiff

Afternoon all.

After many years browsing the forum, I decided that it's about time I used it.

I am after some advice regarding remortgaging. So let me give you the facts.

House purchased in July 2010 for £122k deposit of 15% (£18.3k) on a 5 year fixed deal at 6% then in July 2015 to go onto SVR of 7.99%

At the time of getting the mortgage (as you can probably tell) myself and girlfriend of the time didn't earn loads, I had had my job for 1 year, she was on a temporary contract as a teacher.

3 and a half years later, our joint income is in excess of £65k per year, more than double that when we got the mortgage, we have both been in jobs for more than 3 years.

So my question is, do i remortgage, current balance outstanding is £97k of which there will be a 4% early repayment fine. so call it £101k outstanding.

The house has been completely renovated, so I would say it would be valued at least what we paid so we will still be in the 85% LTV area. Although there are similar on the market for £135k

I see all these offers of mortgages with 2-3% interest, with repayments 2/3 what we are paying now!

It all seems a bit to good to be true! I know it sounds daft just paying the £4k early payment fee,but we are stuck in this mortgage for another 20 months ish! is it worth making our cash flow easier and remortgaging? is it possible to go down the route and see what they value the house at, as that could alter the LTV more?

I am at a loss basically, any real help, advice here would be great.

Many thanks to you all in advance.

anotheruser

You earn over 65K and need help with money flow? :S

amnblog

The repayment penalty means you need to save 2.6% on the rate for 18 months just to get it back.

Check your mortgage offer as the repayment penalty may be lower if you wait until the final 12 months.

Mrs_Rachel_Trelfa

Are you not able to overpay e.g. 10% without penalty? You could overpay the max/what you feel you can afford and not get hit with ERC but also save a fortune on future interest and you will be chipping away at the capital so that when your fix ends you will be at a better LTV?

sitesafe

OP I was having very similar thoughts with my mortgage situation - on a 5 year fix with a £3.5k ERC - I cannot afford to overpay. Unfortunately I am recently self-employed so would struggle to be accepted with a new re-mortgage provider without audited accounts (which I don't have).

I hope you manage to find that better deal - I can understand your situation.

kingstreet

If you are going to add that £4k penalty to the loan, make sure you factor-in the interest you will pay on that for the remainder of the mortgage term, unless repaid earlier.

kingstreet

sitesafe wrote:

am recently self-employed so would struggle to be accepted with a new re-mortgage provider without audited accounts

No lender asks for audited accounts.

Two years signed accounts, an accountant's certificate or two years' SA302s from HMRC are the norm.

There are some lenders who accept a single year's income, evidenced by SA302, so it's not as bad as it used to be.

sitesafe

kingstreet wrote: »

No lender asks for audited accounts.

Two years signed accounts, an accountant's certificate or two years' SA302s from HMRC are the norm.

There are some lenders who accept a single year's income, evidenced by SA302, so it's not as bad as it used to be.

Thanks Kingstreet. That's interesting to know - I wasn't sure if my self-assessment would be acceptable.

kingstreet

sitesafe wrote: »

Thanks Kingstreet. That's interesting to know - I wasn't sure if my self-assessment would be acceptable.

The SA302 is the statement you get back from HMRC after making a self-assessment and you can order them.

We get clients to have them faxed to use by HMRC all the time.

dimbo61

Hi jstiff,
You mortgage will go onto what ever the SVR with your lender is in July 2015 so it may not be 7.99%
As others have said that is a big ERC to pay so read all the paperwork that came with your mortgage very carefully as some go down each year!
IE 4% in year one/two 3% in year three/four, 2% in year five!
If you are both earning more I would also look at overpaying now for the next 20 months but again you need to read the paperwork as some ( but not all ) allow 10% overpay each year

jstiff

anotheruser wrote: »

You earn over 65K and need help with money flow? :S

Just we are both young, and would like more holidays etc etc. live life, rather than waste it on interest.

I rang up regarding overpaying after you all commented on this. and have decided to stay with them at least until July 2014, as it then drops to 2% ERC

I am allowed to overpay 10% per year, stuck it into the online calc and was gobsmacked at how much we save in interest. so put another £400/month on the mortgage.!

So after all my worry (I am a worrier) about not a lot of rainy day money, I decided to up the mortgage and review again in July!!!!! :rotfl:

Just wait till i tell the wife. Mind you she probably won't notice.

Thanks for all your help guys, such a cracking forum!

Cheers