Pay ERC or wait a month?

jonnypb

My Natwest 5 year 2.04 fixed comes to an end on 1st May 2023, so from the 1st November I can change my mortgage as that will be within 6 months.  The next BofE announcement is scheduled for 3rd November.  The interest rate is bound to go up again, so I'm considering paying the ERC charge which is 1% (£585) and getting a 5 year fixed now.  If I leave it until the 1st Nov I think it's leaving it a bit fine to get the mortgage application in and accepted before the 3rd Nov which is the next announcement.

Am I being silly if I pay the ERC with a smallish mortgage for the sake of a month?  I mean even if the mortgage rates went up another 1% between now and next month would it be worthwhile paying the ERC, or would I not really be saving any money in the long run?

Thanks

IvyFlood

To be honest I think some banks have already factored in the Nov BOE increase when they put their rates up today. So personally I would wait.

CSL0183

Your logic is sound and fortunately before the next scheduled meeting where rates will go up further. 

Your plan should work. However, if the BOE intervene with an unscheduled meeting (murmurs of it last week after the £ collapsed) then it is possible rates will increase before then. 

Personally, I think the BOE will be monitoring the £ performance very closely each day and if any further falls they will step in. For stability though, it’s best they wait until the next meeting. 

When I switched products with Halifax a couple of weeks ago I needed to be within the last 3 months before I could look at rate switches. If you are staying with Natwest, just double check their time frames for product switches. 

jonnypb

CSL0183 said:

Your logic is sound and fortunately before the next scheduled meeting where rates will go up further. 

Your plan should work. However, if the BOE intervene with an unscheduled meeting (murmurs of it last week after the £ collapsed) then it is possible rates will increase before then. 

Personally, I think the BOE will be monitoring the £ performance very closely each day and if any further falls they will step in. For stability though, it’s best they wait until the next meeting. 

When I switched products with Halifax a couple of weeks ago I needed to be within the last 3 months before I could look at rate switches. If you are staying with Natwest, just double check their time frames for product switches. 

Yeah my worry is that the BoE intervein before the next scheduled date, although like IvyFlood said the banks are probably already factoring in the rises.

Natwest will allow you to switch if you are within 6 months of your existing deal ending.

CSL0183

jonnypb said:

CSL0183 said:

Your logic is sound and fortunately before the next scheduled meeting where rates will go up further. 

Your plan should work. However, if the BOE intervene with an unscheduled meeting (murmurs of it last week after the £ collapsed) then it is possible rates will increase before then. 

Personally, I think the BOE will be monitoring the £ performance very closely each day and if any further falls they will step in. For stability though, it’s best they wait until the next meeting. 

When I switched products with Halifax a couple of weeks ago I needed to be within the last 3 months before I could look at rate switches. If you are staying with Natwest, just double check their time frames for product switches. 

Yeah my worry is that the BoE intervein before the next scheduled date, although like IvyFlood said the banks are probably already factoring in the rises.

Natwest will allow you to switch if you are within 6 months of your existing deal ending.

Well Nationwide certainly did last night. Not sure other lenders have done so yet but suspect won’t be long before they do. 

london21

The rates have already gone up today.

Depends on if another increase will occur before the 3rd of November.

Few months ago, would have been worth it, not sure now in your case. 

Seraphi

jonnypb said:

My Natwest 5 year 2.04 fixed comes to an end on 1st May 2023, so from the 1st November I can change my mortgage as that will be within 6 months.  The next BofE announcement is scheduled for 3rd November.  The interest rate is bound to go up again, so I'm considering paying the ERC charge which is 1% (£585) and getting a 5 year fixed now.  If I leave it until the 1st Nov I think it's leaving it a bit fine to get the mortgage application in and accepted before the 3rd Nov which is the next announcement.

Am I being silly if I pay the ERC with a smallish mortgage for the sake of a month?  I mean even if the mortgage rates went up another 1% between now and next month would it be worthwhile paying the ERC, or would I not really be saving any money in the long run?

Thanks

Try putting your numbers through this calculator: https://app.nous.co/refix

jonnypb

I had decided to pay the ERC, BUT you can’t do that without an appointment with a Natwest mortgage advisor over the phone. The waiting times is currently 6 weeks which is after the next BoE announcement :-(

Just a heads up for anyone thinking of doing the same, get an appointment booked in even if you’re still unsure.

IvyFlood

CSL0183 said:

Well Nationwide certainly did last night. Not sure other lenders have done so yet but suspect won’t be long before they do. 

I actually spoke to Nationwide yesterday and the advisor said they have been increasing their rates every week for the past 4 weeks! Not sure if he was just saying that...

Edi81

IvyFlood said:

CSL0183 said:

Well Nationwide certainly did last night. Not sure other lenders have done so yet but suspect won’t be long before they do. 

I actually spoke to Nationwide yesterday and the advisor said they have been increasing their rates every week for the past 4 weeks! Not sure if he was just saying that...

They have. Mortgages are not directly priced off base rate. They are linked to swap rates which are currently very volatile. 

road2ruin

jonnypb said:

I had decided to pay the ERC, BUT you can’t do that without an appointment with a Natwest mortgage advisor over the phone. The waiting times is currently 6 weeks which is after the next BoE announcement :-(

Just a heads up for anyone thinking of doing the same, get an appointment booked in even if you’re still unsure.

Our ERC is £11,000 with the earliest chance to remortgage being next July. We've taken the view that we're going to pay it and fix for 7 years as the rate we've got means that there's a fair chance of getting that money back across the period of the new product. It also buys us piece of mind. 

Anyway, the reason for replying to you was that we had the same thing with Barclays albeit with a shorter wait but still 2 weeks. We spoke to our broker and he was able to get us the rate there and then without having to wait for the interview. We need to pay the ERC before we can have the rate switched but it meant not having to wait and I know the rate we've got has already gone so for those who are thinking about it definitely speak to a broker.