Pay the ERC or wait

Vyncenze

I know there's loads of these messages about but I'm panicking like others and really not sure how to play it..

I'm with Barclays. I have 240k outstanding on a 1.54% fix which expires August 2023. I can either re-fix now at 3.15% (5 years) by paying a £5k ERC, or I can wait until Feb 2023 and re-fix for free at whatever the current rates are then...

Barclays existing customer rates are pretty decent in the grand scheme but are obviously going to go up by Feb - question is how much. I figure if it's 1.25% or more then I'm better off having fixed now so that's the way I'm leaning but I just want some reassurance I guess? Anyone think that rates won't change too much by Feb.....?

Thanks for any thoughts

AndyJR

Someone who is better at the maths may come along and help with this in terms setting out the scenarios to help inform your decision on whether to pay the ERC or sweat it out and see what happens next year. Though might need more info in terms of mortgage term etc. That does look to be a competitive existing customer rate from Barclays though, if its still available.   

But just to highlight my experiences over the last few days. I have just fixed with first direct for 5 years for when my existing fix ends at 3.60% (existing customer rate). They updated their product transfer list this morning and this has now been updated to a rate of 5.29%. Providers are already pricing the rate rises in based on the swaps rates, market predictions etc. The problem is everything is so volatile at the moment it is quite difficult to know what is best to do for someone in your circumstances, where there would be quite a chunk to pay in terms of ERC. Really difficult decisions so many people are having to contend with at the moment. 

IvyFlood

Id be tempted to wait till Feb and risk a rate of 4/5%. The ERC would be too much for me.

We are paying our ERC to get out early but ours is only £1400.

Vyncenze

Thanks both.

There's 20 years left on the mortgage so my current payments are 1168, and at 3.25% will be 1360ish. 

If I rate switch I can't delay the rate change so I'll be down £2k over the next 10 months (1360-1168 *10) plus I'll have paid the 5k ERC so it will cost me 7k total. BUT if rates hit 4.3% my payments will be 1493 so over 5 years (60 months) I'll end up paying 60 * 130 more than I would now, which is 7800, right? So I think I'm better off paying now unless rates go up less than that by Feb....???

road2ruin

I'm with Barclays as well although our I would have to wait until August before remortgaging. Our present mortgage is £440,000 and our ERC is £11,000. We're in the process of paying that, fixing at 3.18% for 7 years on the basis that any interest rate above 3.8% (or there abouts) over those 7 years means the ERC payment was a good decision despite the amount. It also buys us some peace of mind as interest rates of 6% would increase our monthly payments by £1,200 per month. 

CSL0183

Vyncenze said:

I know there's loads of these messages about but I'm panicking like others and really not sure how to play it..

I'm with Barclays. I have 240k outstanding on a 1.54% fix which expires August 2023. I can either re-fix now at 3.15% (5 years) by paying a £5k ERC, or I can wait until Feb 2023 and re-fix for free at whatever the current rates are then...

Barclays existing customer rates are pretty decent in the grand scheme but are obviously going to go up by Feb - question is how much. I figure if it's 1.25% or more then I'm better off having fixed now so that's the way I'm leaning but I just want some reassurance I guess? Anyone think that rates won't change too much by Feb.....?

Thanks for any thoughts

Is that rate still active today? Have you checked? If so, it’s market leading and will likely go up any day now. A lot of other lenders have upped their rates over 4 now, even for 60% LTV. If you are basing your maths on 1.25 more so 4.4. We are already there today, look down the forum for the Nationwide thread. 

There will be another rise in November and another in December. I think you’ll be lucky to get sub 6 in January personally. 

Vyncenze

Yeah my original thought was a 7 or even 10 year fix but broker reckoned 5 was a better bet. I'm still in two minds though. Thanks for your reply - nice to see someone having similar thoughts. Frustrating that you can't add the ERC to the mortgage balance too - I don't really have 5k sitting about that I can easily part with tbh.

Have you managed to get through to someone to pay the ERC? I've been trying for days, spent upwards of 10 hours on hold so far

Vyncenze

CSL0183 said:

Vyncenze said:

I know there's loads of these messages about but I'm panicking like others and really not sure how to play it..

I'm with Barclays. I have 240k outstanding on a 1.54% fix which expires August 2023. I can either re-fix now at 3.15% (5 years) by paying a £5k ERC, or I can wait until Feb 2023 and re-fix for free at whatever the current rates are then...

Barclays existing customer rates are pretty decent in the grand scheme but are obviously going to go up by Feb - question is how much. I figure if it's 1.25% or more then I'm better off having fixed now so that's the way I'm leaning but I just want some reassurance I guess? Anyone think that rates won't change too much by Feb.....?

Thanks for any thoughts

Is that rate still active today? Have you checked? If so, it’s market leading and will likely go up any day now. Majority of other lenders have upped their rates over 4 now, even for 60% LTV. 

If you are basing your maths on 1.25 more so 4.4. We are already there today, look down the forum for the Nationwide thread. 

There will be another rise in November and another in December. I think you’ll be lucky to get sub 6 in January personally. 

It is still showing live today but I actually 'reserved it' through a broker at the start of the week. The problem is you have to pay the ERC before they will do the switch, and I can't actually get through to them on the phone to do that... I'm told they give you a few days grace but I'm just logging every call I make in case they try to say I wasn't quick enough. Their system seems to disconnect you after a couple hours on hold 

road2ruin

Vyncenze said:

Yeah my original thought was a 7 or even 10 year fix but broker reckoned 5 was a better bet. I'm still in two minds though. Thanks for your reply - nice to see someone having similar thoughts. Frustrating that you can't add the ERC to the mortgage balance too - I don't really have 5k sitting about that I can easily part with tbh.

Have you managed to get through to someone to pay the ERC? I've been trying for days, spent upwards of 10 hours on hold so far

We are fortunate as we were planning on getting a new kitchen early next year so our budget for that is going towards the ERC. 

I haven't tried to pay the ERC yet as we're still waiting for Barclays to give us the details to be able to do so however I have already been warned that it'll be a wait. Assuming you've tried first thing in the morning just as the phone lines open? When I called to discuss this I 'only' had to wait for an hour as I was on the phone straight away. 

Vyncenze

I tried at 7 this morning but it disconnected me at 9 when I still hadn't got through.

I did actually briefly speak to someone on Tuesday but asked a difficult question (how long can I delay paying the ERC or the new rate kicking in) at which point I got cut off. Annoyingly he had both my email and mobile number but didn't make any effort to get back to me. 

CSL0183

Vyncenze said:

CSL0183 said:

Vyncenze said:

I know there's loads of these messages about but I'm panicking like others and really not sure how to play it..

I'm with Barclays. I have 240k outstanding on a 1.54% fix which expires August 2023. I can either re-fix now at 3.15% (5 years) by paying a £5k ERC, or I can wait until Feb 2023 and re-fix for free at whatever the current rates are then...

Barclays existing customer rates are pretty decent in the grand scheme but are obviously going to go up by Feb - question is how much. I figure if it's 1.25% or more then I'm better off having fixed now so that's the way I'm leaning but I just want some reassurance I guess? Anyone think that rates won't change too much by Feb.....?

Thanks for any thoughts

Is that rate still active today? Have you checked? If so, it’s market leading and will likely go up any day now. Majority of other lenders have upped their rates over 4 now, even for 60% LTV. 

If you are basing your maths on 1.25 more so 4.4. We are already there today, look down the forum for the Nationwide thread. 

There will be another rise in November and another in December. I think you’ll be lucky to get sub 6 in January personally. 

It is still showing live today but I actually 'reserved it' through a broker at the start of the week. The problem is you have to pay the ERC before they will do the switch, and I can't actually get through to them on the phone to do that... I'm told they give you a few days grace but I'm just logging every call I make in case they try to say I wasn't quick enough. Their system seems to disconnect you after a couple hours on hold 

How frustrating. Can’t your broker move it along quicker for you?