Product switching hack/fee

Wonka_2

stud26 said:

Initial term 21 years 1.85%. Now 18 years at 4.16%. 

It's because the current payment was initially based on a £65,000 mortgage and the new payment would be calculated just on the remaining £36,000. Plug in the numbers yourself into a mortgage calculator and see.

Actually, I think there was an overpayment, but that doesn't affect this. I could still save by switching early.

But going back to my initial question, how much are exit fees?

The maths still doesn’t math - how is your business overpayment being taken into account on the current mortgage - either lowering the monthly payment or shortening the term ? 

And only you know the exit fees based on the agreement you signed up to - no doubt if you have the lender/product code someone could tell you but much easier to look at your own account 

stud26

Here are the calculations: 

When I took it the mortgage three years ago:



Now the mortgage is smaller and the new details would look like this: 



Have I done something wrong in these calculations? Should the remortgage calculate based on the original amount, £65,000?

stud26

user1977 said:

stud26 said:

But going back to my initial question, how much are exit fees?

Go find your mortgage offer and read it to find out.

Will do, just wondering if there were general ball park figures like 1-2%, or a flat fee.

MWT

It looks like you are using 20 years as the period for both calculations, instead of taking the remaining balance and the remaining mortgage period which is probably 10 years at this point.

stud26

MWT said:

It looks like you are using 20 years as the period for both calculations, instead of taking the remaining balance and the remaining mortgage period which is probably 10 years at this point.

Thanks. My earlier screenshots show the terms I've used.

400ixl

stud26 said:

Have I done something wrong in these calculations? 

Yes, you are still comparing a £65k 21 year mortgage with a £36k 18 year mortgage when you can't still have 21 years to pay on the £65k mortgage. You can't even have 18 years left, more like 11.

So do a calculation of £36k at 4.16 over the same number of years you have left on the current mortgage.

If you do that you will see your equivelent payment at 4.16% will be in the £340 per month range.

stud26

400ixl said: You can't even have 18 years left, more like 11.

It says it's due to finish May 2042. 17 years 7 months. Do you suspect something is wrong with this? Do I need to talk to the lender?

Martico

If you're paying 310 per month on a repayment mortgage (or even on an interest only) with no overpayments, there's no way that the mortgage would now be 29,000 less than three years ago

400ixl

None of your maths is adding up. How long was your original mortgage for?

£310 monthly on £65k is a 19 year 6 month mortgage at 1.18. If you still have 17 years 7 months left then you will not have £36k left to pay unless you were making massive over payments as you will have only paid 23 * £310 payments totalling £7,130 of which most would have been interest.

The simple fact is that if you keep the term the same, then 4.16% interest will always cost more than 1.18% for the same remaining balance you owe. The only way this changes for the same loan amount is that you pay it back over a longer period paying more overall.

400ixl

£36k over 18 years at 1.18% is £185 per month and £39,976 total to repay
£36k over 18 years at 4.16% is £213 per month and £51,205 total to repay

Pure maths and you can't change it. Look at how much extra you pay back.