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Original poster

Mortgage advice please?

4 replies

ReeseWitherfork · 14/07/2021 09:41

My current mortgage deal ends Jan 2023. I'm paying around £1100 a month. We've done a lot of work to our house (it needed gutting, and the initial mortgage valuation reflected that) so I think if the bank revalue it now it'll be worth a lot more, pushing us into quite a different LTV bracket. Plus interest rates are low.

Doing one of those quick calculations online on the new value gives me a much lower monthly repayment (circa £600).

Does anyone know if I can get out of my deal early? I assume I have to technically repay the mortgage which will cost a fair bit, but if I can save £9k in repayments then it may be worth it.

Anyone got any experience?

OP posts:

BarbaraofSeville · 14/07/2021 09:52

Your current interest rate and mortgage amount must be very high for your mortgage payment to go down by £500 per month just by remortgaging. Are you sure?

Your current mortgage will have an early repayment charge, which you will need to repay if you change your mortgage before the deal is up. This is what you need to compare with the difference in payment over the next 18 months to decide whether it is worth remortgaging.

If you'll save £9k in interest, is this more or less than the ERC on your current mortgage - there's your answer.

Original poster

ReeseWitherfork · 14/07/2021 12:49

Am I sure? No... Honestly not sure about any of it.

My current rate is about 2.6% but my lender is advertising a 1%. The maths works out at about a saving of £500.

The last time we asked about an ERC it wasn't as bad as we thought, something like £7/8k. So only a saving of £1k or so but not to be sniffed at.

I just wasn't sure if it was even possible. Sounds like it is though, so I need to make some calls.

Thanks Barbara

OP posts:

fromdownwest · 14/07/2021 14:24

What is your mortgage balance and house value?
Who is your existing lender?

ForensicAccountant · 14/07/2021 22:53

You would probably need your loan to be a maximum of 60% of value. Are there arrangement fees and valuation fees as well? You would hope that the penalties in the penultimate year are not more than 2% of the outstanding loan with 1% in the last year. Might be worth waiting until January. Of course rates could go up in the meantime.

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