Pay the ERC or wait

Vyncenze

CSL0183 said:

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?

No, to be fair he was very good but Barclays specify that you have to pay the ERC direct to them on a debit card, and there's no specific line to do it on so you join their general 'servicing' line along with everyone else...

Orchid96

road2ruin said:

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. 

Hi @road2ruin
I am remortgaging with Barclays at 3% for 10 years. My situation is similar to yours, ERC of £10500 for mortgage amount £530K (details here - https://forums.moneysavingexpert.com/discussion/6379178/should-i-pay-erc-of-10500/p1?new=1). I did calculations similar to yours and felt that it is better to pay the ERC and fix now. 

road2ruin

Orchid96 said:

road2ruin said:

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. 

Hi @road2ruin
I am remortgaging with Barclays at 3% for 10 years. My situation is similar to yours, ERC of £10500 for mortgage amount £530K (details here - https://forums.moneysavingexpert.com/discussion/6379178/should-i-pay-erc-of-10500/p1?new=1). I did calculations similar to yours and felt that it is better to pay the ERC and fix now. 

Just had a read through the replies to your post. I guess it comes down to your own personal risk. For me I would far rather risk £11,000 for short term pain and know that I have 7 years for everything to calm down and I will hopefully make that money back in lower monthly repayments. It gives us that head space as having to cover another £1,200 per month would leave us very little and it just wouldn't be worth living in the house. If there is a house price crash we're then in even more trouble. I'm assuming that in 7 years there will be a degree of normality restored and we'll also have another 7 years of repayments so we can decide then what to do with the house. 

Good luck with whatever you decide. 

Vyncenze

If anyone does manage to get through and pay the ERC please let us know how!

Orchid96

road2ruin said:

Just had a read through the replies to your post. I guess it comes down to your own personal risk. For me I would far rather risk £11,000 for short term pain and know that I have 7 years for everything to calm down and I will hopefully make that money back in lower monthly repayments. It gives us that head space as having to cover another £1,200 per month would leave us very little and it just wouldn't be worth living in the house. If there is a house price crash we're then in even more trouble. I'm assuming that in 7 years there will be a degree of normality restored and we'll also have another 7 years of repayments so we can decide then what to do with the house. 

Good luck with whatever you decide. 

Thank you and Good luck to you too.
We also think 10 years is a good time for things to settle down.
Hopefully house prices should be back to normal by then.
We can manage the payments at 3%, but if it goes to 5-6%, will make the life difficult.