Ditch the fix, even with early repayment charge

confused_kid

Hi all, thanks for taking time to read this,

Our situation is that we moved into our place start of 2013 and took out a 5year fixed @5.19 % (ouch!!) over 35yr term. 240k mortgage, now we're in a position that we have some around 65% LTV (85% previously) and mortgage is now 199k (house value 315k)...unfortunately still in our fixed till end of 2017 however even with a ERC of 5k we'd still save based on rates today plus I haven't factored in the overpayments we are making today (1.2k p month mortgage with £100 p month over payment)...with new mortgage we'd reduce the term to match the continued £1300 p month, should make significant difference.

My question is am I missing anything major in my crude assumptions above and secondly I hear of the tighter lending criteria now but does that apply to remortgaging with the same potential lender? My wife is currently on maternity therefore do lenders take the current situation into account and her statutory maternity income or her actual salary?

Just trying to see whether its worth speaking to a lender to kick-off process or wait until my wife is back?

Thanks for reading

amnblog

A two year fix is liable to give you a savings based on the maths. You need a rate under 4% to make a saving and most two year fixes are currently under 2%.

How the maternity leave is handled depends on how long before your wife returns to work, future childcare costs, and the Lender.

A broker would be your best guide on this situation.

pfryer

i have used the Ditch the Fix tool and provided the current APR rate of my fixed mortgage which has 3 years to run (4.3% APR) as requested. (The actual rate is only 3.24% however). The answer came back that I should ditch for a rate of 4.04% or less, which is easily achievable. But is this the APR figure again? or the lower percentage rate without all the charges? Does anyone know the answer? This really needs to be made clear.

confused_kid

Hello all, just an update to my original thread


decided at the time that it was worth paying the early repayment fee and move to a 10year fixed and kept the payment the same but reduced the terms from 30-35years, to 20 years! just over a year into it now, and will now start looking to overpay and try to finish it off within the term (or maybe with 12 months of term completing)...just started a thread over in the mortgage free wannabe section here - https://forums.moneysavingexpert.com/discussion/5617830

strawberries1

confused_kid wrote: »

Hello all, just an update to my original thread


decided at the time that it was worth paying the early repayment fee and move to a 10year fixed and kept the payment the same but reduced the terms from 30-35years, to 20 years! just over a year into it now, and will now start looking to overpay and try to finish it off within the term (or maybe with 12 months of term completing)...just started a thread over in the mortgage free wannabe section here - https://forums.moneysavingexpert.com/discussion/5617830

OP, 10years is a mighty long time!
I'm a FTB and about to make an application.
Would you suggest 2yrs or 5? Why?
Fixed or tracker? Why?

Thank you.

tom2205

Some 10 year products out there are great products and gives you solid reassurance of long term security should anything happen.

Strawberries1:

It is all down to personal preference and your situation. The OP may be better off with a 10 year fixed based on their circumstances but a 2 year tracker mortgage could be best for you. It's different for everyone based on their individual situation.

strawberries1

Thanks Tom!
I don't plan to sell this property for another 10years at least however I did say to him that as a late 30s female I hope to meet someone soon and will be open to relocating. I didn't think he'll base my mortgage decision on that and PAM!! he recommended 2yrs. Surely I could look into get consent to let if that happened??