Remortgage - maths question

Dan29

Hello all

I'm with Barclays and have about £85,000 left on my mortgage. My plan for a while was to move onto the SVR when my current fix finishes at the end of November, as I'm planning to put the house on the market in March. However I'm now considering the possibility of the house taking longer to sell than I'd anticipated, so I'm looking at taking a new deal with Barclays (I cannot move lender).

SVR is 5.74%. The two-year trackers I'm considering are:

1) 3% at current rate. Fee £999, no ERC. 

2) 3.24% at current rate. No fee, ERC 1%. 

I'm erring towards paying the fee for the 3% tracker as I calculate I'll be saying roughly £190 per month in interest over the SVR; therefore in just over five months I'll have broken even, and will continue to pay less interest each month if the house doesn't sell.

I'm hoping someone could check my maths please, and let me know if there's anything I've missed, or anything else I should be considering. 

Many thanks
Dan

shadyron

You don't say how long is left on your mortgage so I've assumed ten years

SVR payments for two years at 5.74% would be £5854 per year, of which 4852 interest first year, 4793 second  year. 
3% would be £4190 per year, of which 2527 interest first year, 2476 second.
3.24% would be £4324 per year, of which 2730 interest first year, 2678 second.

Dan29

shadyron said:

You don't say how long is left on your mortgage so I've assumed ten years

SVR payments for two years at 5.74% would be £5854 per year, of which 4852 interest first year, 4793 second  year. 
3% would be £4190 per year, of which 2527 interest first year, 2476 second.
3.24% would be £4324 per year, of which 2730 interest first year, 2678 second.

Hi and thanks

The mortgage has fifteen years remaining; I had been overpaying but have stopped now that I may need to hold onto more cash to cover living expenses (I do not have an income).

Thank you for doing those sums; your figures are obviously more accurate than mine.

My logic when comparing the amounts of interest is that I'm only worse off paying a £999 fee (or ~£850 ERC) if I sell (and pay off the mortgage) within the first six months or so of the new deal - does that sound correct?

e.g. £999 fee + £1264 interest over six months on the 3% deal = £2263, whereas staying on 5.74% would have cost £2426. 

So if I cannot sell in six months, I'm better off on 3% than 5.74% - does that make sense or have I missed something?

Thanks again!

silvercar

My logic when comparing the amounts of interest is that I'm only worse off paying a £999 fee (or ~£850 ERC) if I sell (and pay off the mortgage) within the first six months or so of the new deal - does that sound correct?

Makes perfect sense.

Dan29

silvercar said:

My logic when comparing the amounts of interest is that I'm only worse off paying a £999 fee (or ~£850 ERC) if I sell (and pay off the mortgage) within the first six months or so of the new deal - does that sound correct?

Makes perfect sense.

Thank you, will crack on with it. Wish I'd acted sooner, but I'm sure I'm not the only one with slight regrets in the current climate!