To remortgage early or not?

Emjb91

We are currently about 6 months away from our fixed term mortgage agreement ending and we were planning to remortgage as soon as that was up. We bought our house for £160k with a 5% deposit and have made significant improvements so it is now worth around £230k.:j

However, we have been thinking about paying the early repayment fee and remortgaging early 1. to reduce the time on the mortgage as a whole 2. to reduce our monthly payment as we now have a much bigger deposit due to the rise in house price 3. to avoid the potential fall in house prices due to Brexit.

We have calculated that even if we pay the early repayment fee, we won't loose out because we would save that money monthly with a lower mortgage each month. So, basically, is it worth remortgaging early to avoid any fall in house prices?:huh:

getmore4less

To have the calculations done you need to post the details of the deals you are thinking of.

basic calculation is add all the fees and ERC see if you can recover them in 6 months(probably 5 by the time you sort it out).

also look at your current lenders retertion deals some lenders let you switch early with no ERC.

muhandis

In your place, I would hang on until I can remortgage without paying any ERC. Personally speaking I doubt that there will be any movements in house prices big enough to make it worthwhile to pay ERC in the short period that you are talking about.

Of course I could be wrong and the world might be on the brink of a 2007-08 style Great Recession, but who knows for sure!

Emjb91 wrote: »

So, basically, is it worth remortgaging early to avoid any fall in house prices?:huh:

Emjb91

This is where we are a bit naive, we know there are fees from some banks etc. for setting up a new mortgage but were not sure what other fees there would be?:huh: Would we have to pay for surveys etc. again?

We have been looking at HSBC 1.64% with £0 set up fee, which works out about £640 a month. I think the thing we are most worried about is house prices falling and not having as much deposit to put down when we remortgage in April.

getmore4less

We have calculated that even if we pay the early repayment fee, we won't loose out

how have you worked out you will save money. post your workings.

muhandis

The thing is, most lenders' remortgage offers are valid for 3 months anyways, so even if your deal ends only in April, you could apply for a new mortgage in January-February, which is just a few months away.

The fees that you might incur could include - product fees, valuation fees, legal fees, etc.

Emjb91 wrote: »

This is where we are a bit naive, we know there are fees from some banks etc. for setting up a new mortgage but were not sure what other fees there would be?:huh: Would we have to pay for surveys etc. again?

We have been looking at HSBC 1.64% with £0 set up fee, which works out about £640 a month. I think the thing we are most worried about is house prices falling and not having as much deposit to put down when we remortgage in April.

Emjb91

We have made an excel sheet it's not worth posting, but it basically says that we could shorten the mortgage term and save £150 a month still or keep the mortgage term as it is and save £200 a month.

So if we save £200 a month over 5 months if would balance out the ERC.
If we save £150 a month we would be about £250 worse off due to the ERC.

So I guess we could wait and not pay the ERC and risk that house prices will not change much.

getmore4less

That is not the right calculation.

post the details of the deals with the fees and ERC.

glosoli

I find it very difficult to believe that it would be worthwhile leaving your existing deal with only 6 months to run unless your current rate of interest is absolutely astronomical...

Doctor_Duke

I am in your position and am already applying for a good rate to reserve it when the ERC expires in April. Just slow the whole thing down so you get an offer in the 3 month validity period of the mortgage offer or just gamble and apply in the new year. The good thing is that you then don't need to rush and if the lender for any reason does not approve you, you can try another in a few months. Really it is like having a crystal ball!!

getmore4less

£1k erc with a mortgage around £140k-£150k >4% would do it.

depending on exact details could be less