Remortgage - Great Escape or Not?

freddiegold

Hi,

The fixed period of my 5 year mortgage with Natwest is due to end on 31st July and I've set my sights on switching to Barclays. I'm just contemplating whether to go with their 'Great Escape' (no fees) or with the standard fixed tariffs, so am hoping for some advice.

I have £86,000 remaining on my 2.99% deal, LTV is about 26% for the remortgage. I pay £1,064 per month but am looking to extend the term on the remortgage to 25 years and thereby reduce the monthly cost, but make overpayments.

Here are the options I've homed in on, along with the monthly repayments, plus remaining debt after 5 years for comparison (courtesy of the calculator here on MSE):

(a) Great Escape: 5 Year Fixed = 2.09% £0 Fee (Repayments of £368 pm / £72,192 debt remaining after 5 years)
(b) Standard 5 Year Fixed = 1.79% £999 Fee (Repayments of £360 pm / £72,558 debt remaining after 5 years)
(c) Standard 7 Year Fixed = 1.99% £999 Fee (Repayments of £368 pm / £72,879 debt remaining after 5 years)

The above figures for (b) and (c) are when the £999 fee is added to the mortgage.

I can afford to pay the fee by not adding to the mortgage and when doing so the figures change to:

(b) Standard 5 Year Fixed = 1.79% £999 Fee (Repayments of £356 pm / £71,724 debt remaining after 5 years)
(c) Standard 7 Year Fixed = 1.99% £999 Fee (Repayments of £364 pm / £72,042 debt remaining after 5 years)

Which option would you go for?

Also, I intend to make over payments, but this is hard to calculate as it will depend on how much I have. But I guess I should just pay the fee upfront, if this is my intention, right?

Thanks.

getmore4less

If you are going to pay the fee you need to do the great escape with £999 less borrowing.

If you are going to overpay you need to do the calculations with the actual payment not the contractual.

£86,000 * 0.003 * 5 = £1290 interest only, you can cover the fee by £291
repayment 25y £369.29pm after 5y

£86,000.00 2.09% £368.29 £72,192.45
£86,999.00 1.79% £368.29 £72,039.42

On regular repayment saving reduced to £153.

break even payment.
£86,000.00 2.09% £693.08 £51,669.33
£86,999.00 1.79% £693.08 £51,669.33