Ditch the Fix calculation help

jainraghav74

outstanding loan = 85k (example)
interest rate = 1.94%
LTV = 57%
fixed period = 1yr 6mo remaining
ERC = 2%
total mortgage term = 14.5 years

assuming total remortgage fees to be £100, what should be new interest rate that justify ditching the fix? for example, is 1.64% on a 2 yr fix a good deal?

I know there is a calculator on MSE website but that does not take into account the outstanding loan.. Can someone please help how should I proceed in this case?

harshitguptaiitr

based on information in the example:
your current monthly payments are = 560.82
interest payment during next 1.5 years = 2367.86

if however interest rate were to change to 1.64% instead,
your monthly payments will be = 549.22
revised interest payment during next 1.5 years = 1999.78

so you are saving 368.08 in the interest payment during this period plus you have an extra 11.60 per month of cash to invest, save or spend.
now subtract from this any extra remortgage fees - 100 in your example.
also subtract from this any ERC... 1700 in your example.

getmore4less

Max saving is difference in rate for 1.5 years on Interest only

Cost 2%

to recover 2% over 1.5 years 1.33%

You need a rate below 0.61%


Repayment savings are lower needs a lower rate.