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Should I stay or go? Mortgage Woe

Last post Mon, Oct 26 2009, 12:25 AM by maxsteam. 1 replies.
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  •  Mon, Oct 26 2009, 12:25 AM

    Re: Should I stay or go? Mortgage Woe

    You only really need to do the calculations until 31/7/11 because then you will be able to take on any mortgage without the early repayment penalty. You should also stop saying "added to the new mortgage" as if it means that you don't have to pay. I will do the calculations as if there were exactly 2 years to go.

    two years at 5.29% on £124k = £13119

    two years at 2.74% on £124k = £6785

    Difference = £6334

    Fees = £4813

    Saving = £1512

    My feeling is it is marginal whether the saving will be enough to make the switch worthwhile. You would certainly need to be sure that there wouldn't be fees for anything extra (valuation, solicitors, etc). You also need to be aware that different lenders calculate their rates in slightly different ways (2.74% is a bit lower than I'd expect - if you used 3.35% in the above calculations, there would be no saving).

    The calculations are approximations for several reasons including because, while there is £124k outstanding now, there will be less outstanding one or two years from now.

    In your shoes, I might wait until 2011 and see what the current lender could offer to persuade me to stay. I would look at the other options then.

    • Post Points: 5
  •  Sun, Oct 25 2009, 11:56 PM

    Should I stay or go? Mortgage Woe

    I currently have a Woolwich mortgage with £123,794 outstanding balance on a £300,000 home with 18yrs 8m to run I pay £868 per month currently. The mortgage is fixed at 5.29% for 3 years which ends on 31/07/2011. There is a 3% early repayment charge during the fixed period.

    I'm terrible at maths and want to know if I would save by moving to another mortgage (eg. below) now and taking the hit on various charges or would be better waiting till the end of the fix period. The early repayment change would be £3713 currently (which would be added to the new mortgage). For arguments sake (I understand that the mortgage rate could vary!!) please assume the interest rate would stay the same as the rate below during the lifetime of the new mortgage:

    Rate: 2.74%

    Term: 18 years

    Fees: £1,100 (added to new mortgage)

    Calculated: monthly

    The new rate would also mean I would be able to overpay around £100 per month

    Please help - my brain hurts!!!

    • Post Points: 20