Worth remortgaging yet?

dave76

My Nationwide mortgage is currently split in 2 parts due to porting an original mortgage and taking out some extra when we moved house. Current state of play is something like this, costing about 860/month)

Originally 25 years with 22 remaining
Part 1: 120k @ 2.5% variable (BMR -> BoE base rate + 2%)
Part 2: 45k @ 4.99% for next 2 years (was 5 yr fix, will revert to SVR in 2 years)

Total outstanding 165k on house worth 220k - 75%LTV
Part 2 has 5% redemption penalty (£2250), Part 1 has no penalty

I guess the question is could I save more than the redemption penalty over the next 2 years or is it not really worth it until that fix is up?

I'm also due to get some inheritance money once a house is sold which I could use to wipe out 40k of the mortgage - not sure if thats best spent on the cheaper part with no redemption fee or the expensive part with a redemption fee!

Thrugelmir

Remortgaging to another lender may well incur additional costs that can mount up. These need to be factored into the equation. In the short term term overpaying part 2 of your mortgage may well be your best option. As once you leave the BMR on part 1 there's no going back. A rate of 2% above base rate should not be discarded lightly.

dave76

thanks, sounds reasonable.

I think penalties and new product fees would probably not make it worth it at the moment but everybody seems to be switching at the moment so thought I'd check it out

getmore4less

Probably not worth a change for reasons given, you could work out the rate needed for the change to break even over the 2 years.

If you do get some cash , consider the drip fees at max rate without penatly and reducing the term on the fixed part over just a large overpayment with penalty.

with a 5% penalty around a years worth of drip feed will definately worth keeping back probably more if you can find a good rate

somethingcorporate

Have you considered moving the element not in a fix to a better rate with Nationwide?

Our smaller mortgage with Nationwide (around £40k) came out of fix recently and we moved onto a variable around 1.7% with no ERCs, and it means our mortgages now end at the same time.