Help with mortgage calculations please

hw185

Hi

I'd be really grateful if someone could help me understand whether it may be worth me remortgaging or not. I've had a look at the "ditch your fix" calculator but I'm getting confused because the figures vary a lot depending on how long I say that my ERC applies for.

I am 2.5 years into a 5 year fix with Co-op with ERCs of 5% in year 1, 4% year 2, 3% year 3, 2% year 4 and 1% year 5.

When I got my mortgage, it was 90% LTV (185k with a purchase price of £206k) and as a result the rate was high at 5.89%.

My mortgage is now about £172k. It would have been about £175k but I have overpaid by £3,300 (up to 10% per year is allowed penalty free) which I can withdraw the cash again at any time.

I have about another £3,000 which i could use to put towards any legal fees / ERCs etc.

So, can anyone help me understand if it may be worth remortgaging please? Would the answer change if I waited until May when my ERC will drop from 3% to 2%? I'd want to get another fix as my budget is quite tight and I like the certainty of knowing what my payments will be.

Thanks in advance

hcb42

What is the house worth - realistically?

The ERC ££££ is hefty - all you can do is identify the new product and see what you could save assuming you qualify..

amnblog

Look for sold prices on somewhere like Zoopla. The value of the property as assessed by the new lender is the key issue.

ValHaller

You can remortgage penalty free in 2.5 years time. Right now it is worth doing if you can save more than 3% in 2.5 years - so if you can get a deal at more than 1.2% less than your current deal. In May, it will be worth doing if you can save more than 2% in 2 years - so if you can get a deal at more than 1% less than your current deal. Overall, if you can get a deal which meets the criterion now, go for it.

As others are saying, it probably depends on whether the property will value to support a lower LTV to get you a better rate.

hw185

Thanks for the responses, I've been assuming that the house value is unchanged from when I bought it 2.5 years ago.

So from online figures, if my LTV is now 85% then the best rates are around 3.8% so it sounds like it could be worth it!

Thanks :j