To pay a £7K exit fee now

[millymog11]

For my fixed term mortgage on 1.9% expiring 3 March 2024 (i.e. 18 months to go) in order to get a 10 year fixed at 3.8% with a different mortgage provider which will basically pay off my entire mortgage and also consolidate my small home improvement loan?
£7K seems steep especially as I have 18 months left on my current fixed but my current fixed mortgage provider (Santander) has TOTALLY shut down its website page which, until 48 hours ago listed their other mortgage deals and I waited 55 mintues on their call helpline at about 5pm last night before giving up and putting the phone down.

(Single mum sole earner, two teenage kids live with and depend on my 100% of the time) , cannot afford to default on my mortgage, need certainty of mind, what would you do?)

Well you need to work out the maths on different scenario's in terms of how much you’ll pay back (in total, plus monthly) for each interest rate. Only you will know what your monthly tolerance is. Also factor in a mortgage fee?

I can imagine for some people £7k extra on the value of the loan (plus compound interest so will probably be well over £10k if not more) will be tempting if you don’t have much leeway for interest rates to go to 5%.

Without knowing your circumstances I would say 3.8% is a very good rate given the current rate and it will only go higher. Say it gets to 5-6% for a few years and then drops down again (a good scenario) you’re still doing alright.

Thanks Mr Autumnal.
This is incredibly helpful. I am grateful to you.

• I have a video call with the new lender this Friday (lloyds, had my day-to-day banking with them for 35 years) got in principle offer from them on the email and the phone yesterday although for the first time in my life they started this "rates might change by the time you have your interview.
• Property valuation is £650K (lowest valuation on zoopla instant valuation)
• I will need to borrow £150K which includes the small home improvement loan i took out with lloyds (consolidating it on the lower mortage interest rate)
• about £7.300 exit to Santander
• probably about £99 admin fee to Lloyds.
• I did fill out one of those online legal and general "mortage search" things yesterday so I guess random advisers might phone me today, oh joy!

Like I say I would probably prefer to stay with Santander and "hop onto" a new 10 year fixed rate (naieve thinking by me I guess) but they are literally not responding to emails, to webpage chat function and 55 mins to the helpline last night no pick up i gave up.

I am very risk averse. But if it had not been for the mini budget end of last week I would probably have thought lets stick with the last 18 months of my current 1.9% rate.

I believe Santander and HSBC suspended new mortgage deals yesterday which is probably why you can’t get through. Would imagine the others will be following suit soon-hope you get a decent deal Friday

You'd have to account for the 7k and higher payments for 18 months in your comparison.
It depends on your individual circumstances, wouldn't be worthwhile for me but might be for you.

What is the likelihood that there will be fixed deals at around 3.85% (5 or ideally 10 years) available in March 2024 do you think?

in terms of monthly costs the online calculator yesterday gave my monthly cost (even including the £7K and consolidating the £10k home improvement loan i have with lloyds) at about £50 per calendar month less than I am paying now, although obviously it is £7K down the drain on an upfront basis. I am currnently over paying monthly on my santander mortgage £1450 but Lloyds calcuator say I would be paying £1453 pcm for about 10.5 years (fixed rate).

Urgghh.

But thank you to everyone who has replied I am really. I posted on a different chatboard yesterday with this identical query and over the weekend and both times I was hounded off as over reacting and being hysterical.

Having listened to the Lloyds adviser on the phone to me yesterday during the call saying "we cannot guarantee we will stil have 3.85% rate available on Friday" (i.e 3 days hence) I feel a bit more comfortable that I am not over reacting. Thank you for your thoughts

£100 k over 25 years (for example). For each .25 rise is an extra £13 per month.

There’s nothing I can see under 4% at the moment, I can’t compare Lloyds as they are direct only so don’t come up on our sourcing software.

Personally I’d stick as I think this is a knee jerk reaction (lenders not you OP) and will calm down.

Singlebutmarried · Today 08:41

Thank you so much for your post Single. You sound like you know the market I am very grateful for your view.

I have a video call with Lloyds at 16.30pm on Friday evening, just getting payslips/passports etc ready (although I have done all my banking with them since I was 13 in 1989 so i think they know my credit history!!).
I have to say the difference between Lloyds customer service yesterday (immediate response to online chat, they called my mobile back within 30 minutes, took basic notes, email of my booked video call with a mortgage adviser within 5 mins of that call, emailed in principle mortgage offer (with caveat on the interest rate admittedly) - all felt a bit better than the 55 minutes muzak then nothing on the Santander helpline..... !

But as per your post sounds like Lloyds operate a different system for their mortages compared with Santander.

I can’t quite grasp how a higher rate with more borrowing is less than your current. Unless you are going over a longer term?

Im expecting the lenders to come back online tomorrow with some products.

It’s not a different system. It’s just they sell only direct to customers.

I can access the rest of the group, just not Lloyds itself.

Id go to an independent broker also as they can do side by side comparisons. At the moment you’ve nothing to compare the Lloyds mortgage to (like for like)

I would recommend you speak with a broker also, realistically most lenders have changed rates or will do so by the end of the week and they will probably hold there for a few weeks so you have time to consider your options

That's a tough one. But you'd have to work it all out. Work out what your currently paying for the next 18months and then a possible prediction on the rates it could go to and use that for the term of new deal.

In your new monthly payment you'd have to factor in the exit fees and compare the totals over the 10yrs or so. £7K seems a massive amount especially on £150k. Although I know rates at 6% etc make a massive difference even on a low mortgage payment. My first mortgage was £645 at 6.5% interest or similar. Bought just before the crash but only took 2yr fix and it then went down to 2.5% after that and it saved me about £250 a month. So it does make a massive difference. Borrowed just over £100k.

March 2024 is a long time off OP, things should have calmed significantly and we should have a labour government (surely to goodness these twerps will have given us a GE by then) so I think your current rate is so good as still has a long time to run I’d wait it out

Can you cost up the total amount for a 10 year mortgage at 3.8% and 7k redemption fees.

Then work backwards to see what interest rates would need to be in 18 months to be cheaper overall. Might give you an idea about how much rates would need to rise to make it worthwhile.

But given the statement by the IMF, I'm not convinced there won't be some big chsnges before your mortgage expires.

"I can’t quite grasp how a higher rate with more borrowing is less than your current. Unless you are going over a longer term?"

I don't know, I am rubbish with maths. Although it might have something to do with the fact that i have overpaid my mortgage since I got it (took it out fixed 5 years at 1.9% starting December 2018 basic monthly payment £1190, I have paid £1450 every month since the start and made a few £1k bulk deposits over the last 3 or so years to bring it down).
The lenght of the mortgage started at 18 years in December 2018 but now my Santander online account says duration 13 years which is a bit quicker than straight line.

I don't know.

They will probably pull that rate by Friday and my monthly charge would be more. Who knows.

It is doing my head in a bit.

"and we should have a labour government (surely to goodness these twerps will have given us a GE by then)"

sorry to be thick and ask a dumb question (which if my mind was not racing so much I would know the answer to) but when is the very last deadline when the next GE has to be called? I did know the answer to this but now it has flown out of my head (no guarantee it will be labour of course but the polls at the moment look that way at least on a day to day basis that is)

It's such a hard one to call OP, but I would say that the £7k fee to exit sounds very high and if possible I'd try to plough as much into the mortgage as possible whilst you have the low rate. What are your earnings ?

"and made a few £1k bulk deposits over the last 3 or so years to bring it down)."

My santander mortage is currently £140K but I would wrap up my home improvement loan via Lloyds (£10,500) into that bringing it down from the Lloyds home improvement loan rate of about 5.9% into the 3.85% and that is why I said I would be borrowing about £150K - £157K (if i cannot find the £7K exit fee for Santander)

Stop paying all the extra amounts off your 1.9% mortgage and put as much money as possible into paying off your 5.9% loan for a start. I would always get rid of the more expensive loan first.

There is a calculator on money saving expert which tells you if it is worth switching, but I think
£7k is too much to pay to exit a £140k mortgage when you still have 18 months to go at a low rate.

I would personally save the 7k and all the fees and save save save

In 18 months things could look a lot better ! And you will probably have quite a lot of savings too.

Keep paying your 10% off every year.
When the deal is coming to an end usually 6 months before. See what your options are?

You should have saved at least 20k or more by then..

It’s going to cost you 10k in early repayment charges and extra interest for those 18 months.

you need a broker to give you some scenarios for different interest rates, fixed terms etc to see if that’s worth it.

Yes agreed pay the loan off! That's a high rate of interest

"Stop paying all the extra amounts off your 1.9% mortgage and put as much money as possible into paying off your 5.9% loan for a start. I would always get rid of the more expensive loan first."

You are right. I do have a tendancy to be fixated on getting my mortgage down. But i was offered a deal on triple glazing (gmt incentive scheme) which would cost me just over £10K and decided it was worth it in light of energy bills. Did it all in a bit of a hurry and to resist the hard sell 11.9% apr over 180 months the window company wanted me to take out (so at least I got that bit right!!!)

www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator/

I think they’ve pulled the rate anyway. If you go through their calculator with your figures it’s showing their only ten year fix as being 4.85

What is the likelihood that there will be fixed deals at around 3.85% (5 or ideally 10 years) available in March 2024 do you think?

In 1977 rates took 2.5 years to rise from 6% to reach their peak of 17% in 1979 they then took 9 years to fall back to 8% in 1988 before rising again to 15% in 1989, it then took another 4 years to drop to 5%.

I think it is best to prepare for a lengthy period of high interest rates and the £7k to fix might be wise....