Posted on: 20th Jan, 2009 01:43 pm
Hi,
We purchased a terraced house in Sep 2007 for 198000 and took out an offset mortgage with Coventry at 5.99% for 150000. The mortgage is fixed for 5 years and there is an early repayment charge of 4%.
As of Jan 2009, we have managed to reduce the mortgage balance to 115000 by making extra payments. Looking at what has happened with interest rates in the last 6 months and likely future drops - we are now thinking of remortgaging at a fixed rate of around 3-3.5% for the next 2 years. This means we will have to pay 4% to Coventry to get out of our current mortgage. I think that amount will offset in interest charged in the next 1 year.
With the mortgage balance roughly around 60% of the property value (taking in to account recent property price falls) - we should be able to get a good fixed rate mortgage.
Is this is a good idea?
thanks
We purchased a terraced house in Sep 2007 for 198000 and took out an offset mortgage with Coventry at 5.99% for 150000. The mortgage is fixed for 5 years and there is an early repayment charge of 4%.
As of Jan 2009, we have managed to reduce the mortgage balance to 115000 by making extra payments. Looking at what has happened with interest rates in the last 6 months and likely future drops - we are now thinking of remortgaging at a fixed rate of around 3-3.5% for the next 2 years. This means we will have to pay 4% to Coventry to get out of our current mortgage. I think that amount will offset in interest charged in the next 1 year.
With the mortgage balance roughly around 60% of the property value (taking in to account recent property price falls) - we should be able to get a good fixed rate mortgage.
Is this is a good idea?
thanks
Hi mac_asger!
Welcome to forums!
In my opinion, the idea is not bad. But you should note the fact that you will have to pay the early re-payment charge of 4% and also the closing costs involved with the remortgage. If you can afford both of them, then I think you can remortgage your loan at a fixed rate of around 3-3.5%.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
In my opinion, the idea is not bad. But you should note the fact that you will have to pay the early re-payment charge of 4% and also the closing costs involved with the remortgage. If you can afford both of them, then I think you can remortgage your loan at a fixed rate of around 3-3.5%.
Feel free to ask if you have further queries.
Sussane
where have you been finding interest rates below 4%? rates have actually worsened a bit in the last week or two, and generally fall between 5 and 6 now. to obtain a 3.something rate is something i'd call pretty unusual.
i'd suggest you try to negotiate yourself out of that 4% prepayment penalty - not saying you'll be successful, but it's worth the try.
i'd suggest you try to negotiate yourself out of that 4% prepayment penalty - not saying you'll be successful, but it's worth the try.
you need to pay the early repayment as well as the closing costs associated to the mortgage. so be prepare with your budget.
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