Remortgage Early and Pay Early Redemption Fee?

Greenr

Hi

I'm due to remortgage for the first time in May 09 but I'm slightly worried about the rates continuing to rise. I know that we can't predict the future but does anyone think I should re-mortgage now and pay the early redemption fees? I'm on a 6% rate at the moment...

Any advice would be greatly appreciated.

mitchaa

Its not just interest rates rising you need to be wary of, its the equity in your home for a new mortgage also. You may for example have a 75% LTV at moment, but it cound dwindle away down to 90%+ this time next year.

I was reading in the paper this morning that the average mortgage IR being sold at the moment is 6.27%

How much is your early redemption fee, and how much equity do you have in your home for LTV reasons?

A 5yr sub 6% fix IMO would be a good move.

Your equity by the time May 09 comes along may have dwindled away so much that it may not give you a competitive rate due to high LTV borrowing.

Its only a decision you can make, if i were in your shoes, i would be a bit worried too. Luckily i have a fix for a further 4 yrs so can sleep a little easier

homer_j_3

You would need to provide more details to be honest. The simplest answer is work out what your ERC is and then divide that by 9 or 10 for the number of months that you have got before may. This is the amount of money that you will need to save per month to break even.

The likelihood is that you will struggle unless you pay a high arrangement fee but it does depend on a lot of factors.

As far as rates arec oncerned. Its crystal ball stuff whether you should take the hit now or take the hit later.

beecher

My fixed rate ends in December and I'm going to wait and see. Have decided to try to overpay as much as possible to hopefully get it down to £40,000 or so by then so even if fixed rates are much higher it shouldn't make too big a difference. I appreciate that fixing now might be an option for those with bigger mortgages though.

Greenr

mitchaa wrote: »

Its not just interest rates rising you need to be wary of, its the equity in your home for a new mortgage also. You may for example have a 75% LTV at moment, but it cound dwindle away down to 90%+ this time next year.

I was reading in the paper this morning that the average mortgage IR being sold at the moment is 6.27%

How much is your early redemption fee, and how much equity do you have in your home for LTV reasons?

A 5yr sub 6% fix IMO would be a good move.

Your equity by the time May 09 comes along may have dwindled away so much that it may not give you a competitive rate due to high LTV borrowing.

Its only a decision you can make, if i were in your shoes, i would be a bit worried too. Luckily i have a fix for a further 4 yrs so can sleep a little easier

Hi

Thanks for your reply... Sorry to sound thick but what does 'IMO' stand for? I bought my property for £67450 but only put a 3% deposit down with halifax. the property needed a lot of work doing to it and we had it re-valued last September at 90,000. I'm going to ring halifax now to find out what my early redemption fee would be...

mitchaa

IMO-In my opinion

mitchaa

House prices have supposedly dropped by around 7% since september, so that £90k may only be £84k now.

(Although that is a wide generalisation, its all dependent on regional variations, area, value for money to begin with etc, there's no guarantee your home has dropped 7% like nationwide stats tells us it has)

Going on the basis of it having dropped 7% already then you have a house worth £84k and a mortgage of ??? £60k??

Based on £60k mortgage you will have around 30% equity in it to date.

So if it were me in your shoes, i think with such a small mortgage and reasonable amount of equity in it i would probably advise holding off until May 09 as i cant see you going beyond the 90+% LTV in the next 11 months.

It all depends on what your charge is for early redemption.

Greenr

My early redemption fee with Halifax would be £1995 now or £1330 from next month onwards... I could re-mortgage with Halifax for 5 years at 6.09%:

Can anyone explain what max 75% LTV means? My property was valued at 90000 last august. Would I need to have my property valued again before I can apply to remortgage?

mitchaa

Greenr wrote: »

My early redemption fee with Halifax would be £1995 now or £1330 from next month onwards... I could re-mortgage with Halifax for 5 years at 6.09%:

Can anyone explain what max 75% LTV means? My property was valued at 90000 last august. Would I need to have my property valued again before I can apply to remortgage?

Loan to value

£75000 mortgage on a £100k property would be 75% LTV
£25000 mortgage on a £50k property would be 50% LTV

The lower the LTV rate, the better the rate you are offered.

With the same lender, you probably wouldn't need a new valuation no. In that i mean you wouldn't/shouldn't need to pay for a new one.

£1330 fees for finishing early, how much did halifax say this new mortgage would cost? Were there any arrangement fees? Also do you know how much your current mortgage settlement figure stands at, ie how much have you already paid off?

I think i would probably advise on holding off.

homer_j_3

it means that your mortgage cannot represent more than 75% of the property value and yes it will need to be re valued.

Greenr

mitchaa wrote: »

House prices have supposedly dropped by around 7% since september, so that £90k may only be £84k now.

(Although that is a wide generalisation, its all dependent on regional variations, area, value for money to begin with etc, there's no guarantee your home has dropped 7% like nationwide stats tells us it has)

Going on the basis of it having dropped 7% already then you have a house worth £84k and a mortgage of ??? £60k??

Based on £60k mortgage you will have around 30% equity in it to date.

So if it were me in your shoes, i think with such a small mortgage and reasonable amount of equity in it i would probably advise holding off until May 09 as i cant see you going beyond the 90+% LTV in the next 11 months.

It all depends on what your charge is for early redemption.

Should I just arrange for my property to be re valued to find out for sure? Also, would the mortgage provider use this valuation or send their own people out to value? My mortgage is about 65000