A few years ago it was rare to find a fixed rate worth switching to even if it meant paying redemption penalties on your original rate. Times have changed recently and fixed rates have dropped very quickly indeed. 18 months ago a five year fixed rate of 6% was quite a good rate. Now, however a five year fixed rate can be as low as 4.44%.
The question remains then. Is it worth paying redemption penalties with your existing lender and remortgaging to a new lender? In some circumstances, yes, it is.
Here’s an example of a recent remortgage that we arranged. The client had a 5 year fixed rate at 6.19% with 44 months to go until end of redemption penalty. The redemption penalty was £2600. The new rate we found was 4.69% which represented a £112 per month saving. Even when taking into account paying the redemption penalty and the new mortgage arrangment fee, the saving over the 44 months was £1329 which equates to £30 per month. £30 per month is better off in your pocket than a lender’s so it is definitely worth remortgaging and paying that redemption penalty. Of course, this depends entirely on your circumstances but it is worth you having a look to see if you can save money during this recession. If you would like further advice please use the enquiry form or call us on 0870 080 2343.
