Remortgage Advice

HertfordshireBen

Hello,

I was hoping somebody might be able to advise me if it worth me remortgaging?

Currently I am in a fixed mortgage for 5 years with Santander at 4.99% with 2 years 11 months remaining. We borrowed £225000 and the house value was £250000. Over a 25 year period. Monthly repayments of £1315.00.

My partner and I earn £55k a year between us and have £215000 left to pay on mortgage, I have been told by Santander the cancellation fee is currently £10779. The current house price has been estimated to be worth £310000

Is it worth us remortgaging to get a lower rate and swallow the cancellation fees? Or just carry on with what we are paying now?

Any advice or recomendation would be highly appreciated.

Ben

csgohan4

play with the mortgage calculators and mortgage best buys for remortaging

http://www.moneysavingexpert.com/mortgages/?_ga=1.233634910.1590013134.1479299672

muhandis

Assumptions -
Value of house - £250,000
Mortgage size - £215,000
Interest rate for best 2 year fix avlbl at this 86% LTV (as per MSE mortgage finder) - 1.89%
Mortgage arrangement fees - £800
Early Repayment Charges - £10,779

If you stay on the 5 year fix, over the next 2 years you will pay (approximate figures) -

Interest (4.99% x 2 x £215k) - 21,457

If you remortgage to the 1.89% deal, over the next 2 years you will pay

Mortgage fee 800, ERC 10,779, Interest 8,127 (1.89% x 2 x £215k), a total of 19,706 (does not include any valuation fee, solicitor fee, broker fee, etc)

This is admittedly a very rough calculation, but hopefully will give you a better idea about how to check whether it is worth paying the ERC and re-mortgaging to a lower rate.

Personally speaking my thought process would be -

1. To first get myself in the 85% LTV bracket ie a maximum loan size of around £212k for a house worth 250k so that rates go down a notch before considering remortgaging.

2. Once I'm there, checking out what rate I am realistically likely to get (the top rates might not be available for my particular circumstances).

3. Check if there is a Santander product that I can switch to thus saving on some of the costs associated with remortgaging.

Hope that helps.

HertfordshireBen wrote: »

Hello,

I was hoping somebody might be able to advise me if it worth me remortgaging?

Currently I am in a fixed mortgage for 5 years with Santander at 4.99% with 2 years 11 months remaining. We borrowed £225000 and the house value was £250000. Over a 25 year period. Monthly repayments of £1315.00.

My partner and I earn £55k a year between us and have £215000 left to pay on mortgage, I have been told by Santander the cancellation fee is currently £10779.

Is it worth us remortgaging to get a lower rate and swallow the cancellation fees? Or just carry on with what we are paying now?

Any advice or recomendation would be highly appreciated.

Ben

HertfordshireBen

Hi Muhandis,

Thank you for your detailed reply. I forgot to mention that our house has been estimated at £310000 by a local estate agent.

muhandis

Adjusting the same calculations for 69% LTV - Assuming a current value of 310k, loan amount of 215k, a best buy 2 year fix of 1.19% and £1500 arrangement fees, that would total up to costs of £17,400 (not including other fees associated with a remortgage) over the next 2 years if you remortgaged.

Changing that to a Santander best buy 2 year fix at 1.49% (1k fee), that figure would be £18,200. However in this case you should not incur any other fees on top if it is done as a non-advised product switch online.

Personally, I would take the estate agent quoted figure with a pinch of salt and take off 5-10% to be prudent.

EDIT: Here's the MSE Ditch-Your-Fix? calculator http://www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator

HertfordshireBen wrote: »

Hi Muhandis,

Thank you for your detailed reply. I forgot to mention that our house has been estimated at £310000 by a local estate agent.