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mac_asger · Joined: 20 Jan 2009 Posts: 1 1.43 Dollars($)

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

smithsussane · Posted: Tue Jan 20, 2009 7:50 pm Post subject:

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

gmakerley · Posted: Wed Jan 21, 2009 8:50 am Post subject:

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.

equitytalkingfinancing · Joined: 16 Jan 2009 Posts: 4 2.34 Dollars($)

you need to pay the early repayment as well as the closing costs associated to the mortgage. so be prepare with your budget.

[Link deleted as per forum rules. Thanks.]

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