To remortgage early or not?

ChrisD1985

Afternoon all. I was in two minds whether to remortgage early, and pay an ERC or not, and was after, not so much advice, but was curious as to what others would do in a similar situation. Which I suppose is advice by any other name! I’m a bit concerned that given the possible impending doom of Brexit and COVID continuing that house prices could crash and/or interest rates could spike and that the number of mortgage deals around wont be as good as they currently are. As a result of this we won't be in as strong a position as we currently find ourselves in.

 

A bit of background. I have two mortgages, one is a home owner loan, that are due to reach the end of the initial fixed period around April/May next year. The combined cost of these per month is £870 and I’ve been overpaying them both for the last 2 or 3 years and currently overpay by £500, up from £300 originally.

 

I can remortgage with my current provider (HSBC) which will reduce my payments per month and move me down to the <60 LTV. Payments would go to £822 on a 5 year fix. It would cost me £717 to buy myself out of the current deal(s) with no arrangement fee. 

So, remortgage now or wait it out and see what the situation is like in the new year?

MWT

What would be the ERC on the new 5 year fix?

MFWannabe

When can you change without incurring an ERC? 

ChrisD1985

MWT said:

What would be the ERC on the new 5 year fix?

hi.I know we can overpay by a maximum of 10% each year without incurring a charge. The ERC is 1% of the amount repaid over this 10%. this is on the existing mortgages and i cant find out the information for the new mortgage, i'll assume it's the same but cant be sure. We still have 19 years to pay and approx £150k to go so we wont be fully repaying it within the next 5 years. Unless i win the lottery!

MFWannabe said:

When can you change without incurring an ERC? 

We can change without incurring an ERC in May 2021. Both current mortgages are due to finish the fixed period around this time. Both within a month of each other.

MFWannabe

Normally you can change before the current fixed period ends, ours we could do it 3 months before within ERC 

ChrisD1985

MFWannabe said:

Normally you can change before the current fixed period ends, ours we could do it 3 months before within ERC 

thanks. I've not seen that as an option with our current mortgages but i'll go back through the documents with a fine toothcomb to see if its an option. I'd obvisouly not pay an ERC but if the worst case predictions do come true, which they may not obviously, it could turn out to be money wisely spent. £717 to end the current deals early fix for peace of mind for 5 years. works out as £12 a month if you take 717/60. Just undecided what to do at the minute.

dimbo61

Are you sure your figures are correct ?
£717 to get out of the fix seems cheap at less than 1/2% on a £150,000 mortgage.
If you can sign up to the new deal 3 months in advance I don't think 60% LTV mortgages are going to jump u in the next 6/9 months.
Keep overpaying every month 

MFWannabe

ChrisD1985 said:

MFWannabe said:

Normally you can change before the current fixed period ends, ours we could do it 3 months before within ERC 

thanks. I've not seen that as an option with our current mortgages but i'll go back through the documents with a fine toothcomb to see if its an option. I'd obvisouly not pay an ERC but if the worst case predictions do come true, which they may not obviously, it could turn out to be money wisely spent. £717 to end the current deals early fix for peace of mind for 5 years. works out as £12 a month if you take 717/60. Just undecided what to do at the minute.

It’s definitely worth checking as if you can then that’s not that long away 
I called mine as it was a little confusing 

MFWannabe

I recently fixed on a new 5 year deal for piece of mind and payments really came down too as Ltv was a lot better and interest rate much cheaper 😬

ChrisD1985

dimbo61 said:

Are you sure your figures are correct ?
£717 to get out of the fix seems cheap at less than 1/2% on a £150,000 mortgage.
If you can sign up to the new deal 3 months in advance I don't think 60% LTV mortgages are going to jump u in the next 6/9 months.
Keep overpaying every month 

100% certain those figures are correct, just been and double checked. its £709 now The current ERC on the homeowner loan (13K) is £56.41 and £653.26 on the original mortgage (140K). OK, so just over 150K in total but it was an approx figure. I was also surprised it was that little. I honestly expected it to be more. Its what got me thinking about just paying it to be on a longer fix to cover hopefully the worst of any economical meltdown.

Intend to keep over paying. Want it all paying off as soon as possible. thanks for the reply

ChrisD1985

MFWannabe said:

I recently fixed on a new 5 year deal for piece of mind and payments really came down too as Ltv was a lot better and interest rate much cheaper 😬

Thats pretty much what I want and a similar situaiton. I'll ring HSBC over the next few days to see how early I can remortgage without paying an ERC. If I have to pay one for my own peace of mind then so be it. Will just have to keep an eye out on the deals out there and hioefully get one without paying an ERC