Re-mortgage or not

schoey123

Hi,

I need to know whether it's worth re-mortgaging right now. I think it is but i need someone to verify or point me in the direction of a tool i can use.

Current mortgage balance: £121k
Current LTV: 40%
Interest rate: 2.95%
Mortgage expiry: Sep 2020 (so 3 years remaining)
Current payment per month (capital): £622.73
Term remaining: 22 years
Early termination: 3% of balance (so £3.63k right now)

As a comparison (not to say it's the best deal) I've seen a 3 year fixed rate with HSBC (60% max LTV) at 1.59%.

Can someone help me verify how much I could save.

thanks,

Lee

Thrugelmir

How would you pay the ERC? Pay up front or add it to the loan.

Does the product you are proposing switching too have a product fee?

Or offer free legals or valuation? As remortgaging isn't cost free.

What's the redemption (exit) fee on your current mortgage?

Saving isn't just about the difference in the amount you pay every month but also the amount you'll owe at the end of the product fixed term. .

schoey123

I would add the ERC to the mortgage (currently 3% of balance).

New product is £999 arrangement - add to mortgage

Free legals and valuation.

Thanks,

Lee

Sarastro

Hi,

https://www.vertex42.com/ExcelTemplates/loan-amortization-schedule.html

You can use this to calculate the potential implications of both scenarios and see what happens. It's only weakness is that it has one interest rate for the whole loan.

Early redemption fees are there to ensure the bank doesn't lose money by people leaving early which in practice means you are unlikely to save very much at all by switching before the end of the fixed term.

I think I'd be tempted to sit it out for 3 years and remortgage then but what are you trying to achieve? Lower monthly repayments or lower interest paid over the life of the loan? Improving your LTV isn't going to help much as it's already very low.