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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

To fix mortgage or not?

64 replies

Landladymews2 · 04/03/2021 09:06

Our fixed term mortgage is coming to an end and I’m wondering whether to go for a fixed term one again or tracker? The problem with the fixed term is we play to move in a few years but not sure when, so if we fix for 2 years and aren’t ready to move we have to pay a fee again or go onto the standard interest rate so paying more interest than we need to. If we fix for 5 years but want to move before then the broker is saying porting is complicated. If we don’t fix, what are the changes of interest rates going up a lot in the next 3-4 years? Would love some thoughts/advice

OP posts:

Francescaisstressed · 04/03/2021 09:08

Old following this, our fixed rate comes to an end next year. I prefer the certainty but wondering if I'm making a mistake..

8090sTv · 04/03/2021 09:17

I fixed for 5 years and I am losing out. Not heaps but enough to wish I hadn't. If I were doing it now I'd fix for 2 years on the basis of being pessimistic about economic recovery so thinking interest rates will remain low. However I have only ever got non fee products. I was not majorly planning on moving but might. No one told me porting was complicated lol.

Tracker has always interested me, it comes down to whether you need/want your payments to be the same each month. I suppose they could drop further but I'd be surprised if they don't bounce back. I'd be interested to hear from anyone who has had a tracker.

Sorry not really advice just my experiences!

8090sTv · 04/03/2021 09:21

Also the freezing of tax thresholds after 21/22 is something to consider. That always helped me with my income going up a tiny bit to keep up with inflation. I'd probably be more risk adverse atm.

firsttimekat · 04/03/2021 09:28

We've ported in the past and are part way through doing it again. It hasn't been complicated at all. Neither time we've tried to take on more borrowing. But it didn't sound like it would be complicated just the usual affordability questions.

Walesrecommendations · 04/03/2021 09:31

We've had a tracker for a year and we paid heaps off the capital over covid because the interest dropped and we used the saving to overpay. We're due to remortgage in May but will probably be fixing as my partner who is training as a mortgage advisor reckons there won't be many trackers available now interest rates are so low.

Walesrecommendations · 04/03/2021 09:32

We are also planning to move soonish so if we can't get a portable deal then we'll go for one with a 1% early redemption fee which for us would be about 2k to suck up! That's another option depending on what you can afford.

Ermidunno · 04/03/2021 09:34

We’ve only ever fixed for 2 years (owned for 14 years) and it’s paid off. 5 year fixed are higher interest and there are no signs yet of interest actually increasing. As the economic climate changes we will think about fixing for longer but there’s no point right now. I’d fix for 2 years then go on variable if thinking of moving in the following 2 years.

Original poster

Landladymews2 · 04/03/2021 10:39

@Ermidunno That’s what I was thinking but that means paying a 1k fee now and 1k fee again in 2 years to get another product or do you mean staying on the SVR rate which I think can be pretty high? I guess I should also look around for products that have no fees.

OP posts:

SchrodingersImmigrant · 04/03/2021 10:42

When my fix came to end I paid just £60 for valuatir (because value changed) and that was it. Are you sure you would 100% have to pay 1k?

Ermidunno · 04/03/2021 10:44

@Landladymews2 there’s plenty of fee free mortgages though, or there was when we remortgaged. We only paid the £999 mortgage fee once when we first bought our first house. We now stick with our bank as they have the same rates as when we’ve looked around but as existing customers we get fee free mortgages.

peak2021 · 04/03/2021 10:44

Given how low interest rates are, I can only see them going up, just no idea when.

Yellow85 · 04/03/2021 10:45

Agree with PP that porting is only complicated if you are moving to a lower priced house than current mortgage. I’ve fixed at the lowest rate I’ve seen and plan to port it as I reckon rates can only go one way in the future!!

Ermidunno · 04/03/2021 10:46

@peak2021 absolutely they will however with the current economic climate it’ll be a while off. Interest rates haven’t recovered from the 2007 banking crisis and Covid will mean it’s just going to take even longer to recover.

HollyGoLoudly1 · 04/03/2021 11:00

I've ported a mortgage and it wasn't complicated at all.

Bigtruth · 04/03/2021 11:22

Personally I'd look at the cost differential. A 2 year fixed likely has a 1% ERC in the second year. A tracker without an ERC could easily be .5% higher rate than a fixed rate mortgage.
If you do fix you'll highly likely be able to port and if not it shouldn't be expensive to pay the ERC.

There are plenty of 3 year fixed mortgages on the market at the moment too so depending on timescales you could opt for that initially.

Bigtruth · 04/03/2021 11:24

@Ermidunno rates are largely expected to rise in the short to medium term in the UK. They will most likely remain historically low but I'd put money on them being 5 times higher than they are today within 18 months.

LST · 04/03/2021 11:33

ShastaBeast · 04/03/2021 11:36

We found the only problem with porting was if the existing provider won’t lend enough to buy the house you want. With affordability criteria the banks vary a lot in how much they lend, especially if you have kids. We kept on our old variable rate, but this is higher than the fixed rates on offer, but lower than the reversion rates for these fixes. So we pay a bit more for flexibility and less paperwork every x years.

Ultimately it depends on the current and possible new fixed rates, the reversion rates and how much you’d want to borrow to move. We worked out a two year fix is cheaper if you go fee free, while a five year is cheaper with the fee, at current rates on offer.

ShastaBeast · 04/03/2021 11:37

@LST five times higher than 0.1 is 0.5 so not that scary.

Ermidunno · 04/03/2021 11:38

[quote Bigtruth]@Ermidunno rates are largely expected to rise in the short to medium term in the UK. They will most likely remain historically low but I'd put money on them being 5 times higher than they are today within 18 months.[/quote]
Really? I’ll look into it before we remortgage again this summer. My friends in the banking industry felt it would be a while yet before rates increase

buckingmad · 04/03/2021 11:40

Ours is due for renewal in a few months. We're planning on doing a 5 year fixed. I can't see interest rates going lower than they are now plus I hate paying the fees.

8090sTv · 04/03/2021 12:16

Original poster

Landladymews2 · 04/03/2021 12:21

Is there a ‘catch’ with no product fee mortgages? I’ve just found one one online. My mortgage broker has only given me options with fees 🤔

OP posts:

SchrodingersImmigrant · 04/03/2021 12:27

I don't think there is? I didn't change my bank though. I just change product at the end of the fix. Does your current provider offer something like that? It took me 5 min online to sort when my first fix ended.

SingANewSongChickenTikka · 04/03/2021 12:27

We’ve just fixed for five years, previously only have done for two. I suspect we may miss out to a degree than if we’d taken a risk on a shorter deal or a tracker, but for us it was important to know what our outgoings are going to be over the coming years so it was the best option for us.

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