[Closed] Remortgage sense check

Tick

I took a five year fixed. I might loose 80 quid a month if rates stay buuut ~2.5 odd percent is crazy low anyway.

I've never made a good financial decision in my life so...

if something big happens and rates start rising

All the low rates products will vanish long before rates actually rise.....

Given rates can only go up, it's just a matter of when not if.

Do the 5 and 10 yr deals have redemption penalties? Are you likely to want to move? Are they portable? How much more are they than the 2 yr?
If I was staying put I'd be inclined to fix for as long as possible.

Curiously in a near identical position, Nationwide, 4 year fix ending, small deposit. Weird.

Gone 5 year fixed, yes the tracker may be better in the short term, but I like knowing what's coming out for the next 5 years.

If you move Nationwide will let you port the mortgage and give you another one for the extra bit, so that needn't be a concern.

No plans to move and we're in relatively stable jobs. Kids aged 6 & 4.

5 year fix is about £80 per month more, 10 year just under £200 per month more.

Exit fees on 10 year 7% for the 1st 4 years then drops by 1% each year.

Exit fees on 5 year, 5% in first year then drops by 1% each year.

5 year fix is about £80 per month more, 10 year just under[b] £200 per month more.[/b]

That increase is more than my actual mortgage payment 😉

So I'm guessing you're not in your 30s and don't live in the south east 🙂

We were in the same boat and went 2 year fix. I put them all in a spreadsheet and even with fees every 2 years the base rate would have to go up quite a bit to make the longer products worthwhile.

Take the difference and overpay if you can.

So I'm guessing you're not in your 30s and don't live in the south east

Correct on both. Although my 30's aren't long ago 😉

I don't think you'll see the rates increase by more than the extra cost to fix in the next few years. Fee free, 2 year fix, bung the extra off the mortgage each month. Spreadsheet that out and see where you are in 2 years time, then ideally at remortgage a lower ltv is on offer too.

To me a long term fix is only good if you really need to have that fixed stability of a regular payment.

**this is my opinion NOT financial advise!

Yes rates are at an all time low and can only go one way BUT if you are saving £80 per month for 2 years and rates do rise effectively you'd need that rate rise to equate to £160 per month for the next two years fixed to make you worse off (assuming your looking at a mortgage with no arrangement fees)

Rates will rise at some point however I feel that when they do they won't rise at a rapid rate...the market is sensitive and any sudden rise could throw 100,000's in to financial turmoil and the Bank of England would carefully consider the impact to both borrowers and the economy when consideringbrake rises.

Companies would not be offering such low rates fixed for two years if they felt it would be leaving them out of pocket.

Seconding although inflation has started to rise there are potential uncertainties about the economy surrounding Brexit. Predictions are that there'll be no rate rises until at least 2018 and even then they'll be fairly minimal.

http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html

So my current decision has been to do a two year fixed on the premis that even with rate rises I'll still be better off 'net effect' in 5 years time.

In saying that if you like the idea of knowing where you are for 5 possibly 10 years fix it up and you know exactly where you stand with the certainly...the trade off is that 10 years at £200/month is £24,000...IF rates were to not rise that's a reasonable chunk of money you could have paid off your capital.

All just food for thought...if any of this was certain and anyone had a crystal ball decisions would be much easier.

I'd have the 10 year but for specific reasons.

Rates are going up at some point and with a following wind we're paid up in 10 years. It closes out the house payments.

Same reason as igm, I am going to fix for 5 years. As that's the end of our mortgage and it's nice to know I'll not have to worry about a rate increase until it's paid off totally.

Remember Nationwide will price match competitors rates for an in -house remortgage. Makes it much less painful, and one of the people they match are HSBC, who do great rates, but are famously picky about credit/affordability checks.

We went 5 year fixed when buying our first house. Looking at current deals is just upsetting - we're paying hundreds more a month than we could be as rates have dropped a lot.

I wouldn't fix for as long as that again unless it was a stunning deal.

We have that very tracker. And will renew again this year. It was actually lower than the fix when we applied and you get £250 cash each time you apply.

Don't forget if another product comes out that betters it you can switch without any problem. Basically the same tracker got reduced twice and each time we jumped on the product within the term of the current tracker.

No restrictions on overpayments too.

For me there is no logic to fixing as we've benefitted now from lower rates which has easily made up any difference should rates increase. And let's face it they are unlikely to shoot up over night.

However we do have the money to clear the mortgage should a disaster happen.

Who knows?
During my mortgage lifetime I've seen Bank of England base rates as high as 15% and as low as 0.5%, thankfully I'm out of it now.

It depends on your attitude to risk but if you go short-term/low rate IMHO you must be self-disciplined and over-pay as much as possible. You have looked at the over-payment terms??

For me there is no logic to fixing as we've benefitted now from lower rates which has easily made up any difference should rates increase. And let's face it they are unlikely to shoot up over night.

Eh?

However we do have the money to clear the mortgage should a disaster happen.

Oh!

Eh

When we started the tracker it was about 1.7%. The tracker product that was renewed dropped to 1.5% so we were able to leave the current tracker and get the new one.

If we'd have been in the fix we wouldn't have been able to do that.

Given rates can only go up, it's just a matter of when not if.

This may not be suitable for you,but since i took out my first mortgage 20 years ago,ive saved many 10's of thousands of pounds by going for tracker mortgages compared to fixeds. There were short periods (probably 3 years) where i was worse off on a tracker vs a fixed,but that period of 'loss' has been more than offset by about 17 years of gains.

However,i could afford to take the risk, if you couldnt afford to take the risk,then go for fixed,but keep the fixed period shortish,otherwise you really start to pay through the nose for long term certainty

Depends on your circumstances. I will have two kids in nursery at around £1200 per month so we fixed for 5 years at 2.19 shortly afterwards 1.99 deals came out....once the 5 year is up we will likely go on some form of tracker as money will not be quite so tight.

Lifetime tracker here. 1.25% above BR.

Doesn't that 10 year tracker cost an extra £24k? 😯