Mortgage early repayment charge

housebuyer143

Why are you so keen to fix for 5 years now at the expense of £4k? Rates are not that much lower than 2 years ago and everything I have read says they might fall rather than rise. 
What rate are you on now?

gadget88

Edi81 said:

Op you need to give the full info. 

How long left on your current fixed rate?
I appreciate you want to fix for longer but you could end up losing money overall. 

3 years left on it they said I can’t port it now I applied for a 5 year deal 

gadget88

Another question will the redemption charge increase before I redeem about June or would it decrease?

BikingBud

housebuyer143 said:

Why are you so keen to fix for 5 years now at the expense of £4k? Rates are not that much lower than 2 years ago and everything I have read says they might fall rather than rise. 
What rate are you on now?

Really! I suppose it depends on what the authors' vested interest was:

One never knows what waves will travel across the pond given current policy changes and angst.

It will rain on a day that ends with a Y!

gadget88

BikingBud said:

housebuyer143 said:

Why are you so keen to fix for 5 years now at the expense of £4k? Rates are not that much lower than 2 years ago and everything I have read says they might fall rather than rise. 
What rate are you on now?

Really! I suppose it depends on what the authors' vested interest was:

One never knows what waves will travel across the pond given current policy changes and angst.

It will rain on a day that ends with a Y!

Well it may mean in 5 years I can remortgage for less than I do now so a win win and a fixed rate to manage bills for now 

grumpy_codger

gadget88 said:

Edi81 said:

Op you need to give the full info. 

How long left on your current fixed rate?
I appreciate you want to fix for longer but you could end up losing money overall. 

3 years left on it they said I can’t port it now 

Did they say why? 

BikingBud

Given your cryptic messages and provision of limited information by trickle flow, it is very difficult for anyone on here to gain any clear understanding of your current situation or your desired next action.

I would expect that in 5 years unless on interest only then your next mortgage will be for less capital hence a better LTV but assuming at a lower interest rate? See the graphic above.

What I would deduce is that you are concerned about affordability and are trying to keep monthly payments as low as possible. You feel that with the sale of current house and purchase of a new property, jumping from your current deal with 3 years remaining to a 5 years deal might provide a lower monthly outgoing but you appear to be trapped with an ERC and if you pay that off then would be short to meet deposit and affordability checks on the new house and likely be overstretching, you have said what the purchase price is and how much the mortgage might differ. Settling an ERC might be an option if you can save the cost over the new term but if you don't have the funds to make it work or even figure out where your break even point might be is it even an option?

At the end of the day if you were after validation of your understanding, I feel you will not get unless you provide much more information. And even then you will get different perspectives.

You were advised to do the maths, put some sensitivity analysis into the figures you have, understand what options you might have, define what the worst case you can tolerate is and make an informed decision.

Or....

With a positive perspective you write that "it may mean" and you feel you have a win-win so crack on, best of luck.

gadget88

grumpy_codger said:

gadget88 said:

Edi81 said:

Op you need to give the full info. 

How long left on your current fixed rate?
I appreciate you want to fix for longer but you could end up losing money overall. 

3 years left on it they said I can’t port it now 

Did they say why? 

No. I think I’d have to cancel the application and redo it and further delay things 

gadget88

BikingBud said:

Given your cryptic messages and provision of limited information by trickle flow, it is very difficult for anyone on here to gain any clear understanding of your current situation or your desired next action.

I would expect that in 5 years unless on interest only then your next mortgage will be for less capital hence a better LTV but assuming at a lower interest rate? See the graphic above.

What I would deduce is that you are concerned about affordability and are trying to keep monthly payments as low as possible. You feel that with the sale of current house and purchase of a new property, jumping from your current deal with 3 years remaining to a 5 years deal might provide a lower monthly outgoing but you appear to be trapped with an ERC and if you pay that off then would be short to meet deposit and affordability checks on the new house and likely be overstretching, you have said what the purchase price is and how much the mortgage might differ. Settling an ERC might be an option if you can save the cost over the new term but if you don't have the funds to make it work or even figure out where your break even point might be is it even an option?

At the end of the day if you were after validation of your understanding, I feel you will not get unless you provide much more information. And even then you will get different perspectives.

You were advised to do the maths, put some sensitivity analysis into the figures you have, understand what options you might have, define what the worst case you can tolerate is and make an informed decision.

Or....

With a positive perspective you write that "it may mean" and you feel you have a win-win so crack on, best of luck.

1st application was refused on affordability as my wife was off for a bereavement so had one pay in 3 pay slips short. We added  further 15 grand deposit we were told 5 grand would still fail affordability but 10 would pass. Assuming I can sell for £160 and the extra deposit I hope it will pass on 2nd application. I moved from a flat a few years back I doubled my mortgage term even with a very large deposit I have to almost double again. I assume people do this to move? I am increasing my deposit by 5x since my last move. Paying atleast 1rd off. I paid £25 grand over home report for the house so it’s not included in the mortgage term. But I am adding 73 grand on my current mortgage I believe. But like I say I am guessing this sort of thing has to be done to move. I am keeping the term 28 years where as when I moved 7 years ago I added 10 years to the term. 

BikingBud

The property ladder is a great fallacy that drives people to spend increasing amounts of money they haven't got in aspiration of achieving the nirvana of their dream home. However,

• Increasing prices mean you need to generate more income = more tax 
• Increasing prices mean you need the loan over a longer period = you generate more income for longer = more tax for longer.
• Increasing prices mean that SDLT goes up = more tax
• Increasing prices mean that as house prices increase estate values increase and more people pay IHT = more tax

And with the size of the national debt interest accounting for ~ 11% of the tax take I cannot see any of that changing anytime soon.

What ever happened to just buying a home?