Should I terminate my interest rate mortgage without negotiating a new deal?

Q My three year fixed term mortgage expires at the beginning of April 2023. At that time my mortgage balance will be £83,000. My husband and I have about £63,000 in savings, so I’m wondering if it’s worth ending the fixed rate without negotiating a new deal. I think that doing this will allow us to use all of our savings to pay off a big chunk of the mortgage without paying a penalty. Then we have about £20,000 on the mortgage which will charge us a final rate of 5.5%. If we do this, as well as avoiding a refund penalty, we also avoid paying a fee to set up a new price. In addition, the amount of interest paid per month will certainly be reduced since the total debt will be smaller. But I’m not sure if I’m crazy, and maybe making a decision to move up to a final rate without negotiating a new contract is risky. Am I missing a trick? It is important to note that my husband and I are both working, and this will drain our savings – but having a small mortgage on our London home will also be good for peace of mind. thinking.

A Are you sure your lender is aiming for 5.5% – or will it be returned? The reason I ask is because there has been a lot of movement in mortgage rates recently so it might be worth checking again before you make a final decision.

The trick you’re missing is the fact that not all secured mortgage sales pay you a fee for the pleasure of arranging them. For example, of the two five-year deals listed by Moneyfacts in its recent mortgage options, only one has a fee typically £ 995. This allows you to set a rate that is higher than your last loan rate and still incur a fee.

I can see that reducing your mortgage to the smallest possible amount is an attractive option. However, I don’t think wiping out your savings will give you peace of mind especially if you have nothing to fall back on if your personal income drops. yes. A compromise may be necessary in which you use a portion of your savings to reduce your mortgage debt but repay the amount you need to cover yourself with a difficult situation.

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