early repayment advice

dochacha

Hi,

Im abit confused and hoping someone can help!

Rough figures are below.
170k mortgage, 6 months in to a 30 year mortgage. 3.5% 2 year fix £760 a month
Overpayment just made of 10% (allowance with no penalty) so have 150k mortgage £695 a month.
If i make another overpayment in year 1 hit with a 3% fee of amount overpaid, in year 2 get 10% allowance then 2% fee over above this

I have another 30k to put towards mortgage. I have spoke to a mortgage advisor who has said to wait until the end of the 2 year fixed rate and then remortgage.

But if i make a payment of 30k then mortgage becomes 120k, £530 per month, saving £165 month for 18 months total saved £3k and have a fee of £900 so gain of £2100.

So unless i am looking at the whole thing wrong i would be better making the overpament now?! any advice appreciated

many thanks

AnotherJoe

Put the 30k into a couple of Santander123 accounts*. Then pay the monthly overpayments you would have made, into high interest rates savers, taking it out of the S123s. Your interest will be overall better than the mortgage rate so you are winning. Pay off the whole amount in 18 months time and you don't have any ERC.

*Assuming you are married and can have one sole one joint.

Thrugelmir

dochacha wrote: »

But if i make a payment of 30k then mortgage becomes 120k,

£30k exceeds the 10% annual allowance. So the excess would be hit with an ERC negating the saving.