Remortgaging and Early Repayment Charges - how does it work?

[butterflycatcher]

Hi there,

We are 11 months in to a 24 month fixed mortgage deal. House prices have climbed 10% in our area since we completed last year. It seems like they are either about to stagnate and/or drop a little. At the same time interest rates are about to rise.

I would prefer to fix into a 5 year deal whilst we can maximise a good LTV ratio. I am currently looking at remortgage deals but our ERC only drops from 2% to 1% in April.

Can I start the remortgage process now and then complete in April and get away with 1% ERC or if we start it now will we have to pay the 2%. If we pay 1% we will still make savings overall, I believe, but the 2% may not make it worthwhile - 5.5k versus 11k.

Thanks for any kind words of wisdom.

You can start the process now, just ask the broker to ensure the new product doesn't start until the day after the ERC drops to 1%.

You'd need to speak to your mortgage provider really - it all hinges on their specific terms and conditions as to at what point the ERC is calculated.

Thanks I bit the bullet, gave the lender a call and they are happy to start the process with us now. It seems like low rate deals are being pulled weekly, definitely don't want to wait around a year to see what rates are going to look like then!