We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Re-morgaging and early repayment

Options
Hi, Our current mortgage deal is finishing in July 2023.  I am thinking about re-morgaging with my current lender. They have offered a lower rate which would save us £150 a month and £9000 over the course of 5 years. There would be a £5000 early repayment charge (5% of current amount borrowed). So this would mea a £4000 saving. Feels like alot of money to pay out upfront, but we can afford to pay out of savings.
The reason we would like re-mortgage is that my partner is self employed and his earnings will be taking a hit in the next year or so due to the current covid pandemic. He has to provide two years of accounts  I have a perm job and my earnings will cover my 50% of the 'provable' earnings. We can afford our month payments, but he needs two years of accounts proving earnings at a  certain amount and this may prove difficult. lm also conscious that if we did wait to re-mortgage in two years we may not get as good a rate if interest rates go up. Our current lender is offering 1.7% for 5 years on the new deal. 
I'd appreciate any advice on this. Thanks in advance. 

Comments

  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Missing information need

    Lender 
    Amount borrowed
    LTV
    current rate
    full term
    payment.
    Fees for new deal


  • Hi
    Thanks, info below
    1) Halifax
    2) 170k
    3) 55LTV
    4) 3.3
    5) 26 years
    There are no fees for the new deal (1.79) as it is a product transfer with our current lender. 
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Will crunch the numbers later.
    1.7% is quite high for 55% LTV. Halifax charge more under £250k.

    Retention deals should be available without checks .

    Do they have a fee rate for retention?

    Any overpayment plans as that makes a difference.

  • Hi, Yes they have said there will be no checks or documentation needed as it's essentially a product transfer. They have said there are no further fees on top on the 5%. No repayments plans either. Thanks for your help. 
  • getmore4less
    getmore4less Posts: 46,882 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    edited 17 February 2021 at 11:45AM
    Key date is July 2023  say 30months (might be 29)
    £170k 26 years 3.3%
    ERC 5% £8,500,   Where did £5k come from?
    typicaly 3% in Year 3 so maybe  £5,100 lets go with that.
    £175100  1.79% 
    where would they both be in 2y6m adding fees make payment same as now.
    amount rate payment owing
    £170,000.00 3.30% £812.35 £159,231.20
    £175,100.00 1.79% £812.35 £158,202.57
    Save ~£1030  
    if going to pay up front it changes too
    amount rate payment owing
    £164,900.00 3.30% £812.35 £153,693.22
    £170,000.00 1.79% £812.35 £152,869.33
    save £825

    if it is only 29 months to end then it looks like
    amount rate payment owing
    £170,000.00 3.30% £812.35 £159,604.62
    £175,100.00 1.79% £812.35 £158,778.07
    ~£826
    amount rate payment owing
    £164,900.00 3.30% £812.35 £154,081.84
    £170,000.00 1.79% £812.35 £153,452.78
    ~£630

    The halifax switch should be easy but I would look at what else you can get
    with income sources a broker may be needed to weed out the picky lenders.

    There are rates for 55% LTV as low as 1.19% with £1500 fee. (TSB intermediaries)

    That stacks up against your current option(there are others in between if TSB does not like you.
    amount rate payment owing
    £170,000.00 3.30% £812.35 £159,231.19
    £175,100.00 1.79% £812.35 £158,202.56
    £176,695.00 1.19% £812.35 £157,303.77

    even with the massive fee that is covered in he 2.5 years leaving you potentially with the 1.19% for another 2.5

  • Thankyou for you advice, that's very comprehensive. I'll have a good look through this today. Thanks again
  • Thankyou for you advice, that's very comprehensive. I'll have a good look through this today. Thanks again
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244K Work, Benefits & Business
  • 598.9K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.3K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.