Can I Remortgage on a Fixed Rate

Think it' t really couturier to pay a charge to get out of your mortgages?

If, for example, you had taken out a five-year fixed-rate mortgages three years ago, one of the best purchases was from the cooperative bank with an interest rate of 4.49%. And because these offerings are so attractive, you might wonder if it's a good idea to get out of your existing mortgages early and switch to one of them.

An ERC can be applied for whether you have a fixed-rate loan or a variable-rate tracking instrument - and they are valid for all the above mentioned loans. Is it ever less expensive to buy the ERC to change to a lower priced one? The prepayment penalties differ from creditor to creditor and from mortgagor to mortgager.

Occasionally, the fee is fixed for the period of the transaction. Other times it is graded, which means that it decreases with each year of the transaction. Also, the foundation on which creditors burden ERCs differs. While some will calculate it on the amount of credit owed, others will calculate it on the amount of credit originally owed.

Throughout Germany, 5% of the amount due is calculated for a five-year fixed-rate mortgages, 4% for a three-year fixation and 3% for a two-year fixation. There is also 3% for a three-year old trackers and 2. The Barclays charge is 3% of the amount due, regardless of whether you have a two, three or five year fix.

For fixed rate mortgage, First Direct will charge 3% of the initial principal in the first year and 2% thereafter for the life of the transaction. The Yorkshire Building Society and Chelsea Building Society have both also graded HRCs on their five-year fixed rate and five-year tracking mortgage. Payment is 5% of the initial credit amount in the first three years, 4% in the fourth year and 3% in the fifth year.

When you decide on a two or three-year contract, you are paying 3%. For five-year fixed mortgage loans, the cooperative calculates 5% of the amount due in the first year, 4% in the second year, 3% in the third year, 2% in the fourth year and 1% in the fifth year.

Since there are tens of millions of ERCs to run, it is difficult to believe that the economies of moving to a lower-cost mortgages could actually make this large amount of cash work. So, we did a lot of research with the London & Country Estate Agent. Let us say that, three years ago, you have taken out the cooperative mortgages fixed at 4. 49% until August 31, 2015.

They now have a £200,000 with 20 years to run available to them so they pay 1,264. 22 a months payback on a payback base. They opt for a change to the two-year fixed-rate mortgages of the Chelsea Building Society with an interest rate of 1.74%. That means you would be saving 6,645.60 over the last two years of your present business.

But to get out of your co-op mortgages, you have to make a 3% charge on your 200,000 pound mortgages owed - which turns out to be 6,000 pounds. They will also have to make a handling charge of 1,545 to Chelsea to complete the transaction - and incur additional appraisal and attorney charges.

At first glance, it would seem that you would NOT be better off going to Chelsea, as you would end up spending 7,545 pounds effective to saving 6,645 pounds. Aft two gathering with the 1. 74% curiosity charge, your unexhausted security interest compound would be £182,982.16. Compared to that, if you were to keep to the Co-op's 4.49% deals, you would have a larger £187,071.

07 links to disburse on your hypothec after two years. This is because the lower interest rate allows your repayment payments to continue to devour the principal of the loans and thus reduce the debts more quickly. That means you would be saving 4,088.91 with the Chelsea deals.

Subtract the 6,000 ERCs and 1,675 handling charge from Chelsea and you will still get a savings of 3,059.51 pounds. So if you need any help, call our London & Country mortgages representative on 0844 209 8725 for free impartial consultation. At the end of a loan, you are converted to your lender's default rate (SVR) by default.

Corresponding to our pictures, the SVR is at 4. 4% on the average and some are even higher (Chelsea Building Society boosts a lurid 5. 79%), so it's a good idea as soon as possible to change to a better agreement. You will not only be saving cash when you get to the new home loan, but there will also be no paying an ERC to get away from your SVR deal. What is more, there will be no paying an ERC to get away from your SVRs.

If you are on a life-time trackers that is no longer competitively priced, you can often change without having to pay an ERC - even though you are checking the details of your mortgages to be sure. Please go to our mortgages section to see which offers are available. YOU CAN REPOSSESS YOUR HOUSE IF YOU DO NOT MAINTAIN THE REPAYMENT OF YOUR LOAN.