? Remortgage from 4.69% to 1.75%

s_glover

We took out our 5 year fixed mortgage at 4.69% with HSBC a little over 3 years ago on our first home purchase. Current balance £174000 and LTV 80%.


At the time having fixed payments was important to us. We have overpaid most of the time and now currently over pay the maximum allowed, 20% of the fixed payment.


We are now considering remortgaging at a much lower rate.


We are looking at the Tesco 1.75% 2 year tracker mortgage. Which allows overpayments of up to 20% of the outstanding debt each year. This would thereby allow us to overpay much more, which we are in a position to do.


The early repayment charge would be £3600 and the setup fee £1050 = £4650.


Our basic fixed payment is now £950 and would be £670 on the new mortgage, over 2 years:


£950 x 24 = 22800
£670 x 24 = 16080
Saving = 6720 minus fees (6720 - 4650) = £2070


The huge advantage to switching would be the ability to overpay by much more each month. We would be looking at overpaying by £600 -700 each month.


We have a few questions we need to ask Tesco and HSBC but I would value your opinions on this plan.


Thanks