? Remortgage from 4.69% to 1.75%

A question about : ? Remortgage from 4.69% to 1.75%

We took out our 5 year fixed mortgage at 4.69% with HSBC a little over 3 years ago on our first home purchase. Current balance Ј174000 and LTV 80%.

At the time having fixed payments was important to us. We have overpaid most of the time and now currently over pay the maximum allowed, 20% of the fixed payment.

We are now considering remortgaging at a much lower rate.

We are looking at the Tesco 1.75% 2 year tracker mortgage. Which allows overpayments of up to 20% of the outstanding debt each year. This would thereby allow us to overpay much more, which we are in a position to do.

The early repayment charge would be Ј3600 and the setup fee Ј1050 = Ј4650.

Our basic fixed payment is now Ј950 and would be Ј670 on the new mortgage, over 2 years:

Ј950 x 24 = 22800
Ј670 x 24 = 16080
Saving = 6720 minus fees (6720 - 4650) = Ј2070

The huge advantage to switching would be the ability to overpay by much more each month. We would be looking at overpaying by Ј600 -700 each month.

We have a few questions we need to ask Tesco and HSBC but I would value your opinions on this plan.

Thanks

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