Switching now - no brainer?

IvyFlood

Our 5 year fixed term is up on 30th September 2023 (currently 2.64%)

I checked our account online and currently the ERC is just under 3k.

However, as of Saturday, we will be in our final year so I think this will drop to just under £1500 (1%)

I had a quick look and we can get a 5 year product switch fixed at 3.74%

Is it a no brainer to just pay the ERC and switch now (well on Saturday!)?

Also, how does one acquire a broker? How do you know they are any good? Do you have to pay them up front? As we may look at remortgaging. And if we were to remortgage, can the ERC be added to our mortgage or does this need to be paid to the existing lender before parting?

jimjames

Not advice but I suspect a 5 year fix of 3.74% will be good value but it depends how much you think you'll have in the next 12 months by paying the £1500 vs waiting and getting a fix then.

CSL0183

Yes, for the sake of £1500, as you say a no brainer. You may be able to switch products with your current lender and it would save all the hassle with getting brokers involved. 

Not sure about the ERC penalty, I think that can be added on. 

propertyhunter

They're predicting rates to be 5.85% next year - so on that basis, it makes sense to me. If the record of the current administration is anything to go by, we'll be lucky if that's the peak. Let's see what Kami-Kwasi says next.

london21

You don't need a broker if staying with the same lender. 

Can compare rates here https://www.moneysavingexpert.com/mortgages/best-buys/

Orchid96

I haven't switched yet, but my remortgage offer amount includes the ERC amount as well. The redemption statement from current lender will give the final figure including the ERC. So you can put your new mortgage request for outstanding + ERC. This is what I did, but not sure how this will be done when you just change the product with the same lender.

london21

If staying with the same lender think the charge will be upfront.

They allow you to add the ERC if moving to another lender.