Should I ditch my fix ????

decsdad

Hi, please help
The numbers-
Term left 12y5m
Balance £151k
3.89%
Left on fix 7y5m
Erc £10,600

New deal
5yr 1.97%
Fees £1500

I discussed this on the phone with the chap at the bank and he said it's not worth doing but I have tried to work it out and I still think it is...albeit not by much.
I just worked it out over the next 5 years, current deal versus new deal plus fees, but also the difference in the outstanding balance after the 5 years. Anything I've missed? Or done wrong?
Many thanks

csgohan4

if it's a different bank, don't forget solicitor's fees, valuation fees e.t.c

getmore4less

Add fees and see if you can recover them in 5 years

the rate difference(1.92%) * capital(£151k) * years gives £14495 against fees of £12100 saving £2395

but that is wrong unless on an interest only mortgage then it is close at around £1900 saving.

if on repayment your current payment will be close to £1280 working with that...


you start with

1. £151k @ 3.89%

Erc £10,600
fees £1500
and are looking to move to

2. 163100 @ 1.97%

Paying £1280 in 5 years you owe

1. £98,736
2. £99,328

Close(£600 down) so if you can find a lower fee and/or rate might be worth another look.

with £1500 fee you need a rate better than 1.885%
with no fee the break even rate would be 2.123%

When does your ERC drop to a lower lever it may be worth looking at that option.


I just worked it out over the next 5 years, current deal versus new deal plus fees, but also the difference in the outstanding balance after the 5 years. Anything I've missed? Or done wrong?
what did your number come out at that said better to switch?

AnotherJoe

Does the ERC drop over time or is it Fixed? If it's fixed, then if you don't move now you'll probably be stuck as this is a good as it will be.

What's the maximum overpayment per year ? Might be worth looking at doing that instead ? Thinking about it you should be doing maximum overpayment anyway as it's going to beat nearly all savings rates.

decsdad

Same bank.
ERC Fee is 7%, reduces by 1% each February.
10% overpayment allowed.
We do overpay by about 7k per year.
The standard payment is £1343 on current deal.

I think I added the erc afterwards, not into the mortgaged sum so didn't factor in the interest on that.

getmore4less

Do the numbers projected to Feb with the lower ERC.

overpayments move the numbers in favour of sticking with the current deal.

As the numbers are so close it is important to include overpayments