Is it worth remortgaging?

lemon26

Hi All, I'd be grateful for your thoughts regarding my mortgage. I initially took it out in March 2012 on a 25-year term with HSBC (£77,000 on a full-term tracker BoE +2.49%). I've been overpaying by around twice the monthly payment plus any spare cash I have at the end of the month.


My mortgage now is £57,000 and I think my house is worth around £125-135,000 and I should be mortgage free in 8 years at the current rate. My question is should I consider a 10-year fixed rate or wait and see what happens with the interest rate? Also, most have fees involved, so would I be better off staying where I am?


Thanks in advance!

marathonic

I'd be more tempted to switch to one of HSBC's current tracker rates - you'd pay a fee of £749 for this if you have an Advance Current Account and save 1% p/a on your current interest rate.

With your current rate of overpayments, rate rises will not cause you financial difficulty. By switching to a fixed rate, you'll pay more interest and, in most cases, remove the ability to make unlimited overpayments without penalty.

somethingcorporate

marathonic wrote: »

I'd be more tempted to switch to one of HSBC's current tracker rates - you'd pay a fee of £749 for this if you have an Advance Current Account and save 1% p/a on your current interest rate.

With your current rate of overpayments, rate rises will not cause you financial difficulty. By switching to a fixed rate, you'll pay more interest and, in most cases, remove the ability to make unlimited overpayments without penalty.

The last point is really important. Most fixed rates have 10% OP limits which on a small mortgage like yours is quite a small value and it appears you are making quite large overpayments and this would be restrictive (or expensive and negate the lower rate if you end up paying ERCs).

lemon26

Hi guys, thank you for your reply. Something I forgot to mention earlier is that I will be coming into £10,000 when my parents sell the house that my grandfather lived in (sadly passed away). I plan to use this money to further reduce whatever the balance is when this property sells.

getmore4less

Doing some numbers with the base cut.

£77k 25y base+2.49% should have been around £365pm

Now £57k(<50%LTV) 2.74%

paying/interest/term


1. £365pm, £13,568, 194m 16y 2m
2. £730pm, £5,851, 87m 7y 3m

lets say £730pm and £10k lump sum in a year

3. Interest will be £4211, 71m 5y 11.

Using the example above base+1.49% with the £999 fees
can do the £749 if you qualify

new mortgage is £57999 @ 1.74%
paying/interest/term/break even month
1. £365pm £7,973 181m 15y 1m 22m
2. £730pm £3667 85m 7y 1m 25m
3.

---

£2672 70m 5y 10m 29m


You will save by switching it will take around 2 years to recover the fees (longer if over payments are higher, less if you qualify for the lower fees.