Confused - Is it worth remortgaging?

Smudger78

Hi,


After some advice. Have three years left to run on a 5 yr fixed rate and trying to figure out whether its would be worth switching given low interest rates. My sums say its not but then the calculator on here indicates it would be. Can anyone have a look at the details below and tell me whether I'm missing something?


Mortgage Balance: £248k
Early Repayment Fee: £7440
Current Rate:3.79
Current Monthly Payment: £1192


New Mortgage Value: £255440 (inc erc from current provider)
New Mortgage Rate: 1.48
New Monthly Payment: £1019


Based on the above it costs £7440 to exist our current provider and we save £170/mths over 36 months (£6120) so its not worth switching however the calculator says any rate under 2.51% is worth moving for when I put the above figures in.


Any advice appreciated! ;-)

Thrugelmir

The saving is in the interest and the amount you'll owe in 5 years time. Not the differential in monthly outgoings.

You need to factor in the costs of remortgaging. Product fees, valuation fees, legal fees and mortgage exit fees.

Smudger78

Thrugelmir wrote: »

The saving is in the interest and the amount you'll owe in 5 years time. Not the differential in monthly outgoings.

You need to factor in the costs of remortgaging. Product fees, valuation fees, legal fees and mortgage exit fees.

Ok but my thinking was I've added £7440 to my mortgage and even if I overpay on the new one so that I'm effectively paying the same as I do now i'll still only over pay by around £6k so will be down overall over the next 3 years. Sorry to be thick but can't see how this is worth doing?


The fee for the product is £1450 and I haven't taken that into account either, no other fees though for the new mortgage and had already taken into account the exit fee as above.


Thanks

AnotherJoe

Rough calculation

The difference between the two interest rates is 2.31%

2.31% of £248k is about £5,700.

So, every year on the lower interest rate, that is £5,700 of interest you aren't paying.

Over 3 years that's about £17k less interest to be paid.

Subtract the various fees , about £9k, and you can see you send up about £8k better off which as post 2 points out, will be reflected in you owing that much less on your house in 3 years time.

getmore4less

Do it he easy way with a like for like.

Add the fees pay the same per month and see what's left in 3 years

paying £1192
£248000 @ 3.79% £232,443
£255440 @ 1.48% £223,179

£9264 better off in 3 years , break even after 16months.

so even if there are more fees you will still be better off

use a simple calculator like
http://www.whatsthecost.com/mortgage.aspx

Smudger78

getmore4less wrote: »

Do it he easy way with a like for like.

Add the fees pay the same per month and see what's left in 3 years

paying £1192
£248000 @ 3.79% £232,443
£255440 @ 1.48% £223,179

£9264 better off in 3 years , break even after 16months.

so even if there are more fees you will still be better off

use a simple calculator like
http://www.whatsthecost.com/mortgage.aspx

Thanks! So glad I came on here as based on my own crude assessment I was thinking there would be no point ditching and switching. As it is it seems we could save a significant amount doing this so happy days and bye bye current provider! ;-)