Do normal people neglect their finances as much as I’ve been doing? In this mini series I’ll share my bad practices and my (hopefully effective) remedial actions.
In Part 1, I’m going to take a look at my single biggest investment, my mortgage.
Am I getting the best rate? / Is it bad that I fixed at 3.69% for 5 years?
I’ve made some pretty bad decisions in my life but it doesn’t usually take me this long to realise!
| Mortgage Value -£96,996 | |
| Rate | 3.69% |
| Monthly Repayment | £590.64 |
| Type | 5 year fixed |
| Remaining Fixed Period | 3 years |
| Mortgage Period | 20 years |
Now I’ve been meaning to do this for months but I finally looked into the exit fee for my fixed mortgage. I read it was £65 on my particular mortgage product. That’s it? 65 quid is all it costs to exit from the fixed interest loan agreement and find a more favourable rate elsewhere?? I wasn’t even expecting exiting to be viable…
I did a few calculations to see what moving to a more favourable rate would look like. Here are my findings in the 2 year fixed interest + repayment market.
I compared 20 providers but shortened the list a bit so there’s not too much going on. Even when you factor in booking*, valuation*, admin fees* AND multiply the exit fee* by 10… I’m still so much better off by switching.
* divided by 24 months
That’s a saving of £117.01 per month by switching. Or, £1,400 a YEAR!
To make matters worse – I’m overpaying by £109.64 per month on my 3.69% mortgage, which means I’m exaggerating my poor interest rate and paying the lender a hefty return.
I’m sorting this tomorrow.
Edit: massively underestimated the exit cost. It’s actually £3800 to exit which means it’s not worthwhile. Spreading the cost monthly brings the cost above the £590 I’m currently paying. I’ll have to sit tight for 2 years and think about what I’ve done!!!
– The Payslip Pauper
The Payslip Pauper 
You’re still wasting less money than those of us who rent!
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I suppose you are right, do you have any plans to get onto the property ladder yourself? Maybe check to see if you’re eligible for the Lifetime ISA (or LISA) – government will give you 25% on savings up to £4000 per year and you can withdraw when you buy your first house (or reach a certain age!)
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This is something we are planning to do soon. I didn’t know you could withdraw at a certain age; I need to look into it in more detail.
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Hi – please accept a nomination for the Versatile Blogger Award: https://halfarsed-runner.blog/2017/07/29/the-versatile-blogger-award/
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Hi TPP,
Good on you for checking through the numbers, you have made me think about checking what my exit costs may be! We locked in for 5 years, but fortunately at 2.95% but still a lot higher than some of the products out there.
Is there a reason you are looking at fixing next for just 2 years instead of the 5? Is it simply to get the rate as low as possible?
We will be remortgaging for 5 years again when it comes up – but then our mortgage is rather larger 🙂
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