Mortgage maths help

CTricky80

Hi All

I need help to understand the maths with my mortgage options. A bit of background is that in early 2018 I remortgaged with TSB and because I find the whole process quite stressful (leaseholder) I opted for a 10 year fixed at 2.49%. I was happy with this at the time but now obviously realise that it probably wasn't the best idea as interest rates have dropped considerably and there are far better deals out there now.

I've used Martin's calculator about whether to ditch or not and it is saying only if you can get a product for 1.64% or lower, if I add a fee then the the interest rate needs to go down (which I think is possible).
500 fee - 1.59% or less
1,500 fee - 1.49% or less

The maths:
Current mortgage (TSB) = 118,013
Repayment term = 25 years (I want to lower this when I remortgage)
Fixed rate interest = 2.49%
Early Repayment charge on or before 31/01/2023 = 6% (maximum they'll charge is £7,819.80)
Current fixed term ends on 31/01/2028

So I've had a quick play around with options just to see what I may be able to get (I will phone a broker as below rates may not be realistic) and with adding the £7k onto the remortgage and changing the term to 18 years I can get deals for:

125,000 mortgage 2 year fixed:
1.15% (£1,499 product fee)
1.24% (£999 fee)

125,000 mortgage 3 year fixed
1.44% (£999 fee)

125,000 mortgage 5 year fixed
1.49% (£490 fee)

125,000 mortgage - no fees
1.54% - 2 years
1.64% - 5 years

So my main question is how much will I save by ditching my current mortgage as my maths is hopeless and all I see is that I'm adding £7k to the amount I owe!

If anyone has views on whether to add a mortgage fee that would be nice to know as well.

Many thanks in advance and yes I am kicking myself for my past decision

nick74

One major limitation of the calculator is that it appears to be assuming that the new mortgage deal fix will last for at least the same length as your existing fix. The problem is that your existing fix still has 8 years left to run, but you're comparing it with deals lasting only 2,3 or 5 years so it's not giving a true comparison. If you go for a new 2 year fix say, then what rate will you get after the 2 years is up? Will it be lower than 2.49%? Who knows.

Someone please correct me if I'm wrong, but after a quick 'back of the envelope' calculation I can't see that any of the deals you are looking at will save you anything at all. None of the savings over the years of the relevant fix will even cover the £7k early repayment charge on your existing mortgage.

For what it's worth, I don't think you should be beating yourself up over a 2.49% ten year fix. Its still historically an incredibly low rate.