Mortgage Free Wannabe Sos

edvardo

I have a relatively small mortgage of £34,000 which has about 15yrs left to run. Recently, though, I have come off the paltry 2.25% interest rate and shot up to 7.89% SVR. The most simple thing would be bail out and punt for a better deal elsewhere, but there is a complication. Redemption penalties bite quite hard for the first 2 or 3 years(5% upto March 08 then 4% to March 09 and so on). In addition to this there is an additional £500 help with costs which will need refunding. On the bright side I have around £17,000 in savings. But before you ask...no I cannot make any overpayments much to my frustration. At the moment it seems as though I am paying out a lot of money with the high interest rate.I feel that there are maybe three options.Offset Mortgage (IF) which would allow me to make overpayments and reduce the term. The downside is that current deals have very high application fees in comparison to the small mortgage.Contact Northern Rock to renegotiate a better deal with lower rate/overpayments with a reduced redemption charge. Sit tight and take the interest on the chin until such time that penalties period expires/savings increase.Any members comments on a course of action would be greatly appreciated.ThanksEdvardo