Credit Crunch - the perfect time to number crunch 19.01.2009

Author: David Whittaker Posted on: 19 January 2009

My client has a mortgage of £200,000 and has a fixed rate mortgage at 5.8% which is going to run for another 2 years. She pays interest of £966.66 per month which means that over the next 24 months she will pay £23,199 in interest to her lender. To get out of her mortgage she has a 2% early repayment charge which in real money terms is £4,000.

I have got her a deal which is fixed for 2 years at 3.69% which has a £1,499 arrangement fee, free valuation and free legals. So, her interest payments on this deal will reduce to £615 per month (hey presto – the saving of £351.55 pcm!) over the next 2 years she will now pay £14,760 in interest.

However we must not forget the cost of getting this reduced rate, so we add on the arrangement fee (£1,499) and her early repayment fee to her existing lender (£4,000) and so this now comes in at £20,259 – thus saving her £2,940 over the next two years.

Impressed? She was!