Should I switch?

shaun_1987

Hi, I have been trying to work out if it is worth me remortgaging to a lower rate mortgage, can any body help?

My current deal is:

Mortgage £79,817
Early repayment £3591 +£200
The interest rate is 5.69%
And I have just under 4 years left on the fix and 29 on the term
My LTV is 85%

I was looking at nationwides 3 or 4 year fix deals as I was to keep to a fixed deal

Thanks Shaun

shaun_1987

I have tried using the calculators but keep working it out different :rotfl:

M0ney

I did a quick calculation...

If you switch to a 3 year fix from Nationwide @ 2.59 you would be around £125/month cheaper and after the 3 years your mortgage would be around £1100 smaller and that is accounting for the early repayment fee of your current mortgage, I'm not an expert but to me it looks like switching is a no brainer for you.

shaun_1987

Do yo mean a 2 year fix? As I can only see a 2. Year at that rate the 3 years are 3.44%?

Also on the website it says free valuation and free standard legal fees, are there any other costs that I would need to consider?

M0ney

My initial search brought up Nationwide at 2.59% not this time though but there are a lot of 3 years fixes which are lower than 3%. The mortgage means you are well over £5,000 better off over 3 years including your current early repayment fee obviously if you were to incur any fees arranging your next mortgage you'd need to deduct that but it wouldn't come to anywhere near £5,000.

shaun_1987

Okay thanks I may book an appointment with nationwide to see about the two year fixed and continue paying my current amount to overpay it... What fees would I need to pay out for as they state free valuation and legal fees on their website?

Thanks

libf

shaun_1987 wrote: »

Okay thanks I may book an appointment with nationwide to see about the two year fixed and continue paying my current amount to overpay it... What fees would I need to pay out for as they state free valuation and legal fees on their website?

Thanks

It's free /basic/ legal fees, so you'll end up paying for any bits that are non-standard, and the free conveyancers can be muppets, so expect to do a bit of chasing yourself.

shaun_1987

Okay thanks, are there any other catches ? And if the valuation doesn't come back as expected and not giving me the LTV I need would I be made to pay anything?

amnblog

Your charge to repay early is about 4.75%


Therefore you need to find a rate 1.2% lower than your current one (and without a product fee) over the remaining four years to be in profit.


Therefore your target rate is under 4.5%.


A £999 product fee would mean the rate would have to be 0.3% lower.

shaun_1987

I have booked an appointment with Nationwide now, as I defiantly need to swap deals. I'm slightly unsure weather to fix for 2 Years (2.49%) though or a 5 year deal (3.44%). I will be keeping my payment at £500 a month to overpay so both deals will work out better than my current deal. Any opinions? are interest rates likely to rise alot more in the next 2 years?

Shaun

getmore4less

rate needed to break even for just the ERC paying £500pm after.

2y 3.19%
3y 3.96%
4y 4.34%