To switch onto new fixed rate or not?

ceminem

Hi all

I am just over a year into a 2 year HSBC fixed rate mortgage at 2.99%, my ERC at the moment stands at £502

Monthly mortgage payments are £322, I am debating whether to switch mortgages early as rates can only go up?

HSBC are offering a 2.49% fixed rate on 70% LTV at £307 a month without fees so if I factor in the savings and ERC then effectively it will cost me £95 to fix until end Sept 16 at the current mortgage payments of £322.

My LTV is below 60% but it seems all the fee free deals at this % have all disappeared and only ones with large fees remain.

To switch or not?

ceminem

Going to switch next month

marsman802

Well I wouldn't assume they are going to go up right away.

In fact my buy to let mortgage has just been undercut - they actually went DOWN and I only applied last month lol

ACG

I would also look elsewhere.

I have just done a quick search and there are rates of 2.29% with a £200 fee available? There are rates of 1.99% but by the time you calculate the fees it would need to be a sizeable mortgage to work out cheaper.

It can be cheaper to shop around.

ceminem

whos that 2.29% with?

dimbo61

I maybe wrong but many lenders will Not let you leave a deal early, pay the ERC and allow you to swop onto another better deal.
This means you may have to remortgage to a new lender

ceminem

yes you are wrong, can switch early on HSBC website

dimbo61

I stand corrected!
I know Nationwide would not allow this
However why are you looking at ONLY 2 years?
Will you be paying off the mortgage early? get a better deal in 2 years as LTV below 65/60%?

ceminem

because 5 year rates are 2.99% and above, already below 60% mortgages at them levels but they all have high fees attached so the 70% fee free deals are much better in my circumstances

marsman802

It's a good point you make.
I was talking to someone else about a similar situation and they were going to take the cheapest interest rate but I did the maths for them and pointed out that due to their low mortgage it wasn't a good idea to add £2.5k.
As ACG points out it needs to be sizeable so the % fee to loan amount is very low to make a difference.

getmore4less

to do the calculations you need to add fees and make the payments the same and then look at amount owing at end of term


Just comparing the costs against the difference in payments gets the wrong answer.


need mortgage size and full term to work it out.