Am I too early to remortgage?

graeme_89

Hi,

Am I too early to remortgage?

My current 5 year fix with Principality ends 31Oct22 (ERC 1%).

I don't want to wait too long and miss out on the current low interest rates but also don't want fork out for an ERC.

I understand you can remortgage up to 6 months in advance, which means I'm a tad too early, is this the case or do I just need to get on to a mortgage adviser asap?

Apologies if this is a daft question, its my first time remortgaging.

Thanks in advance

RelievedSheff

We arranged our remortgage 6 months prior to our previous deal expiring which secured the interest rate and product.

The remortgage didn't complete until our previous mortgage deal had run out to avoid early repayment charges.

You are a tad early yet. You need to wait another month or so.

sammyjammy

Its not six months with Principality, I'm in the same situation although mine ends September, from memory you have to wait for them to send you a letter and that's around three months before the fix ends.

getmore4less

What rate are you paying?
What is your LTV?

With 1% ERC many should have ditched their fix and paid up the ERC.

graeme_89

Current rate 2.2%, LTV 85%

LTV for remortgage will be approx 50%

I used the ditch the fix calculator on the MSE website and it said I would need a rate of 0.69% to make it worth it. 

I ended up speaking to a mortgage adviser at trussle yesterday and they advised that I get some offers for mortgages now (including the ERC) and keep them in my back pocket just incase rates rapidly increase.  Does this seem sensible?

Hopefully I'm worrying for nothing and I'll be able to get a good rate in a couple months time when I don't have to factor in the ERC 

getmore4less

The MSE calculator is not that good for analysing the ditch the fix options(rubish IMO)
It only does the "can you get your money back" in the rest of the term and it does that wrong but gets close.
it does not look at the rest of the term of the new fix and the potential saving on that.

At 2.2% and a 1% ERC on 50% LTV there would have been a decent ditch the fix

Assuming the ERC was 1% around the beginning Nov 2021  with 12m to go.

5y fix with Nationwide would have been 1.14% with £999 fee
(They had ticked up 3 times since the  Sept low of 0.84% could have booked that to start in Nov).

say £100k paying £600pm(~16y full term)  give your real numbers can do the calc

Mortgage	£100,000
payment	£600	ERC/FEE
rate	2.20%	£1,000
new rate	1.14%	£999
Time	Years	months
Left on current	1	0
New fix term	5	0
amount left after(months)		12
Start	rate	End
£100,000	2.20%	£94,949
£101,999	1.14%	£95,930
amount left after(months)		60
£100,000	2.20%	£73,599
£101,999	1.14%	£70,951
Switch when ERC £0
Break even rate needed no fee and fee)		48
£94,949	1.441%	£70,952
£95,948	1.135%	£70,952

if mortgage size into fee based product the ditch was worth considering to lock in.
if not then less attractive(0.3% rise) as still unclear where rates would go. 

if no fee range then that was 1.34% and the follow on needed to breakeven was 1.46% 


or £200k  paying £900pm(~24y)

Mortgage	£200,000
payment	£900	ERC/FEE
rate	2.20%	£2,000
new rate	1.14%	£999
Time	Years	months
Left on current	1	0
New fix term	5	0
amount left after(months)		12
Start	rate	End
£200,000	2.20%	£193,535
£202,999	1.14%	£194,469
amount left after(months)		60
£200,000	2.20%	£166,206
£202,999	1.14%	£159,359
Switch when ERC £0
Break even rate needed no fee and fee)		48
£193,535	1.275%	£159,358
£194,534	1.131%	£159,358

much clearer the ditch was worth considering