Remortgaging early and paying ERC, worth it?

cuppiecake

After a bit of advice, currently in the last year of a 5 year fix at 2.85% over a 25 year period with a 1% ERC, which expires end of May 2023

Outstanding balance approx £125800, property value is around £220000.

I am very tempted by the 10 year fix with Lloyds at 2.31%, I can keep my monthly payments around the same and also reduce the term on the remortgage to 17 years, instead of 21 years at present.

With interest rates going up, is it wise to fix in now and take the hit on the early repayment charge?

Brebal

I’ve just done similar. I have 11 months left til my fixed rate runs out and didn’t want to take the risk that rates will go up even more. Unfortunately I was on 1.74 and having to go up to 2.39 so my monthly payments have increased, as well as paying ERC and product fee…. I’m now hoping interest rates to rise to justify my decision!  I don’t feel great about it, but it’s bought me some sort of peace of mind/security for the next five years. 

jobdone1

My mortgage is three parts, I have just fixed about two months ago at 2.69% ten year that starts on the 01st July when current fix expires. I have checked today if I did not reserve that rate it is now 3.49% so I rolled the dice and pleased I did. 

thegentleway

It depends if you think you'll be able to get a 10 year fix at 2.44% or lower when your term ends (assuming same product fees and same balance which is not exact as balance will be lower in a year's time but gives an easy approximation)

10 year fix at 2.31% = £21,576 in interest for first 10 years + £1,258 ERC = £22,834

10 year fix at 2.44% = £22,848 in interest for first 10 years.

cuppiecake

Thanks for the replies, have decided to go for the 10 year fix early after doing a few calculations.

If I was keeping the term the same repayments would be £100 less each month for the rest of this year than I am currently paying, which would recoup the ERC paid and have the certainty going forward.