Pay ERC off £16.5k.

Maka344

Looking at rates today, we can end our 1.4% deal which is due to expire February 2024. But the ERC is £16.5k between now and Feb 2023 or £10k/2% thereafter. 

We can re-fix at 3.7% for 5 years with LTV of around 68%. Payment goes from £1780 to £2250.

We would struggle financially with a 6-7% mortgage given the size of our mortgage.

Is it worth paying the ERC and jumping ship to a new lender given the size of the ERC. Caveat is we need to move in the next 14 months to be closer to aging family in order to help/support. Areas are like for like price wise. 

IAMIAM

20k fee! No way I would pay that

K_S

@maka344 Instead of remortgaging/switching right away, you may want to consider getting a remortgage offer from another lender, which is usually valid for 6 months and then reassess in 5 months time as to whether you want to complete on the offer (and pay a lower 10k ERC) or stick to your low-rate fix.

A lot can change in 5 months and rates might be no higher (or slightly higher/lower then than they are now. if they are dramatically higher with no sign of coming down, then you can complete on the remortgage.

Maka344 said:

Looking at rates today, we can end our 1.4% deal which is due to expire February 2024. But the ERC is £16.5k between now and Feb 2023 or £10k/2% thereafter. 

We can re-fix at 3.7% for 5 years with LTV of around 68%. Payment goes from £1780 to £2250.

We would struggle financially with a 6-7% mortgage given the size of our mortgage.

Is it worth paying the ERC and jumping ship to a new lender given the size of the ERC. Caveat is we need to move in the next 14 months to be closer to aging family in order to help/support. Areas are like for like price wise. 

london21

The ERC is a big put off but do some calculations.

I think rates will be high in the short term and then calm down when inflation is under control.

tdawber

i would stick, u have 18 months left on your current deal….  

Maka344

Thank you all. Good advice all round. 

It is so difficult for so many people at the moment. My broker said to wait although he's had people paying even higher ERC's than mine - the Bank's are really cleaning up here. 

Orchid96

Maka344 said:

Looking at rates today, we can end our 1.4% deal which is due to expire February 2024. But the ERC is £16.5k between now and Feb 2023 or £10k/2% thereafter. 

We can re-fix at 3.7% for 5 years with LTV of around 68%. Payment goes from £1780 to £2250.

We would struggle financially with a 6-7% mortgage given the size of our mortgage.

Is it worth paying the ERC and jumping ship to a new lender given the size of the ERC. Caveat is we need to move in the next 14 months to be closer to aging family in order to help/support. Areas are like for like price wise. 

Hi @Maka344

In the same boat except that my ERC is 2% (£10.5K).
I started this thread back in august (https://forums.moneysavingexpert.com/discussion/6379178/should-i-pay-erc-of-10500/p1?new=1) thinking that rates will keep going up.
Got an offer from Barclays at 3% for 10 years in July.
There are so many comments in that thread which may be helpful for you.
We have decided to pay the ERC as of now and waiting until December to complete the remortgage.

For you best option now is to secure a deal as suggested by K_S and complete it after Feb with 2% ERC.
Please submit your application as soon as possible as we are seeing rate increase almost daily now :-(

Best of luck.

dimbo61

" the Bank's are really cleaning up here "
I think the Bank's are as confused as everyone else.
They have No idea about what  rates will be in 6/12 months and need to plan.
Brexit, Covid19 pandemic, War in Europe and now a world wide recession and energy crisis
Stamp duty cuts to drive an already overheated housing market with very low mortgage rates !
Landlord bashing on a huge scale as Landlords are All Bad Guys 

MFWannabe

You have 18 months on current deal which is really low rate so wouldn’t change now 
can you overpay at all so your ltv is the best it can be in 18 months time? 

Edi81

The banks aren’t cleaning up here at all. Lots of uncertainly for them at the moment. 

Plus ERCs are a fair reflection of their costs if they break their hedges.