Mortgage porting or a brand new mortgage?

labradorlove

I have just tied in to a new deal in June 2024 for a 5 year fixed rate with Santander at 4.12% paying £574 a month. £83k left on the mortgage. £4.2k early repayment charge.

House should sell for £200k. The house we want to buy would be £320k. 
Our house is currently up for sale and hasn’t sold yet and we haven’t seen one we want either so the values are estimates.
we would need to take £10k out of the house sale to pay estate agent fees, stamp duty & solicitor fees.

My options:

Santander have said we can port the mortgage and take out a second mortgage anlongside. That would look like this

Mortgage 1 (original-to port) - 4.12% on £83k - £574 per month (16 years 7 months remaining, 4 months into a 5 year fix)

Mortgage 2 - 3.68% on £130k - £597 per month (30 years, 5 year fixed rate, product fee £999)

Total monthly payment = £1,171

or

I can pay Santander’s early repayment charge of £4,200 and go out to market to get a whole new deal. Have found a 5 year fixed rate with Barclays at 3.85% for the whole mortgage amount of £217,000. Upfront fee of £934.

Total monthly payment = £1,017

Which is the better option?

Ultimately I want the lowest monthly payments for the new property, but it kills me to have to pay £4,200 in early repayment fees. Also, I don’t work in the mortgage or financial sector at all, I’m just trying to set our financial expectations for the move the best I can, so if this doesn’t look right or I’ve missed obvious steps or things to consider, please let me know. What would you do in my situation?

ACG

Will Santander not allow you to change the term on the current deal? 
If not, then your choice is exactly as you say £4k to lower your repayments. I dont think anyone can help you decide that, its always going to be personal preference. 

I am sure you are aware but your not compare like for like as with Santander you would have a large chunk of your mortgage paid off 13 years sooner. 

SamDude

option 1.5 - put the £4200 ERC towards an overpayment and see what the Santander monthly payments drop to?

kingstreet

ACG said:

Will Santander not allow you to change the term on the current deal? 
If not, then your choice is exactly as you say £4k to lower your repayments. I dont think anyone can help you decide that, its always going to be personal preference. 

I am sure you are aware but your not compare like for like as with Santander you would have a large chunk of your mortgage paid off 13 years sooner. 

Yes. I've just done a Santander port for a 35 year term where there was 30 years left on the existing mortgage.

ian1246

SamDude said:

option 1.5 - put the £4200 ERC towards an overpayment and see what the Santander monthly payments drop to?

This. Or get an even higher return than overpaying by sticking the £4200 & £934 in a Edge savings account and earning 6% interest on the £5134  (£308 a year - £25.67 a month) & also get 1% cashback on your mortgage payments via the edge account - so another £11.71 a month back. That takes you to £37.38 a month (£448.56 a year) in interest/cashback as well as having that £5134 in your account.

With the figures as supplied by the Op:

Santander - £8203 interest a year between the 2 parts of the mortgage vs. £8354 interest a year on the new mortgage with Barclays.

It really is a no brainer....

Gary1237

£4200 is a bitter pill to swallow- I will port the mortgage if you can afford the higher payment -