Switch now or wait 6 months - what would you do?

TrixA

I have a mortgage of £225k, currently on a 5-year fix due to expire on 31/12/22. If I were to switch today I would have to pay an early repayment charge of slightly over £1000. Given that interest rates are likely to rise between now and the end of the year, not sure if it's better to bite the bullet and switch now?

I think part of what's influencing me is an irrational dislike of ERCs after I got pinged with a huge one last time I switched.

Current mortgage is with HSBC, who are offering me 2.94% for a fix of 2-5 years. Looking at the online calculators, my repayments would go up by about £50 pcm if the rate was 0.5% higher (which seems to be a realistic guesstimate by the end of year) so I guess the ERC would be offset within 20 months by the lower payments if I switched now... 

K_S

@trixa If your fix is ending on 31/12, you could also look at what the best remortgage rate (changing to a new lender) available to you on the market right now that will offer sufficient offer validity to allow you to complete on 1 Jan and avoid the ERC. Eg: Nationwide 90 day reserve-on-DIP plus 6 months or NatWest 6+1 month, etc. 

You can then do the numbers and see what works out best.

TrixA

K_S said:

@trixa If your fix is ending on 31/12, you could also look at what the best remortgage rate (changing to a new lender) available to you on the market right now that will offer sufficient offer validity to allow you to complete on 1 Jan and avoid the ERC. Eg: Nationwide 90 day reserve-on-DIP plus 6 months or NatWest 6+1 month, etc. 

You can then do the numbers and see what works out best.

Thanks, I was wondering about this, but wasn't sure where to find info about offer validity dates to be able to compare?

In practice we may be limited in switching lenders as I was recently made redundant from my job and currently looking for a new one. We could afford the repayments on my husband's salary if need be, but I feel like it's going to complicate things.

K_S

TrixA said:

K_S said:

@trixa If your fix is ending on 31/12, you could also look at what the best remortgage rate (changing to a new lender) available to you on the market right now that will offer sufficient offer validity to allow you to complete on 1 Jan and avoid the ERC. Eg: Nationwide 90 day reserve-on-DIP plus 6 months or NatWest 6+1 month, etc. 

You can then do the numbers and see what works out best.

In practice we may be limited in switching lenders as I was recently made redundant from my job and currently looking for a new one. We could afford the repayments on my husband's salary if need be, but I feel like it's going to complicate things.

@trixa If you can't remortgage (change lenders) then it's a choice between paying the ERC and switching now or taking a chance on the rate that HSBC offers you on 1st October (HSBC allows switching 90 days in advance).