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A remortgage is when you transfer your current mortgage to a different policy, even if it's with the same lender, and you arent moving house. However, you might be charged a redemption fee from your existing lender: the new lender might well charge fees too, and there may be legal & stamp duty costs. All your costs, legal, administration and valuation to name but a few are called switching costs. The only really viable reason for remortgaging is if the switching costs are low enough, basically the new mortgage deal has to be cheaper than the old mortgage package, including all the switching costs. Since switching cost differ greatly depending on mortgage lenders, this applet however calculates the Net Present Value or NPV of any improved cash flows resulting from the switch. This program represents the cash flow as a single lump sum for the new mortgage details, if the result is a negative value, then it would only be worthwhile if there is a cashback deal in the remortgage. Enter figure from your current scheme and also the terms of your new scheme. The NPV is shown in red. Compare this figure with the total anticipated switch costs in order to see if the switch is worthwhile. Note there is a difference between a repayment and an interest-only mortgage. Current Scheme
New Scheme
NOTE: for this calculation it is assumed interest is calculated annualy. Individual lenders may calculate interest monthly/daily for individual products
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Calculations - interest only payments |
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Current scheme payments |
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per month for |
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months then |
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pm thereafter |
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New scheme payments |
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per month for |
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months then |
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pm thereafter |
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Cashflow saving of |
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per month for |
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months then |
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for |
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months then |
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followed by |
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for |
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months to end of life |
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saving over a |
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month period - cash only |
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Calculations - capital repayment with rests pa as given |
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Capital after |
initial term |
Final capital |
after months |
Total Life from switch |
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Current scheme repayments |
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per month for |
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months then |
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pm thereafter |
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New scheme repayments |
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per month for |
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months then |
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pm thereafter |
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Cashflow saving of |
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per month for |
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months then |
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for |
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months then |
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followed by |
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for |
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months to life end & capital saving of |
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saving over a |
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month period - cash only |
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Browse over 200 Free Mortgage TipsYour Complete Guide to UK Mortgages Find Out How to Win the Race to Buy Your Home - Home Buyers Guide Learn How to Save ££s by Remortgaging Read the Insider Info on Home Insurance Site Help |
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