Fixed rate mortgage deals

[bubblesbubbles11]

I have a fixed rate mortgage on a good interest rate which fixed term comes to an end in just over one year. Moving my mortgage would involve exit fees of about £7K.
I did look into a deal on a 10 year fixed rate about six months ago but decided against it because of the exit fee.
Now I am wondering again whether I should move my mortgage now to a good 10 year fixed rate and suck up the £7K exit penalty in order to be assured of peace of mind as per Martin Lewis money saving expert quote below in the last week:
"You might even want to pay a booking fee to lock in a cheap mortgage in case things get more expensive and if it doesn't you can get a cheaper one elsewhere, so it's like an insurance policy so you lose a few hundred quid having locked in a cheap mortgage."

Has anyone else done this or thought about it? Do you think this is sensible to do now or should I just wait till the end of my current fixed rate and remortgage then and save the 7K?

I suggest talking to a broker. They will be able to come up with the best offer for you and can then do the sums to see if moving now will save more than the £7k exit penalty.

Thank you Chessie, I will do that. Thank you for taking the time to reply to my post.

How big is your mortgage and how long do you have to go?

My existing mortgage is with Santander.
I have approximately £148K left over 14 years but I am on a fixed interest rate deal which runs out on 2nd March 2024 (i.e. I have two years left of that) and there is an early repayment charge of £7,606 until 2nd March 2024, then it goes to Santander's variable rate.

Lloyds were offering a 10 year fixed rate around about 1st March 2022 and i went as far as having an interview with their mortgage advisor about that but decided against it. I can easily afford the monthly mortgage payments (I am overpaying monthly) and if i looked to re mortgage i would want a 10 year duration to pay it all off by 2032.

Valation of the house is about £530K.

What do you think? I am now wondering whether to pay the £7.6K and lock in a 10 year fixed deal for the sake of certainty.

I am the sole earner; fixed term employment with pension at 65; me and the two children. I can easily afford the mortgage payments. Should I pay the exit fee and jump onto a 10 year fixed?

There are lots of knowledgeable bods on the MSE mortgage forum who can run the figures for you.

I second the idea of posting on MSE but to me £7.6k seems a very high price to pay for certainty on a mortgage of that size that you can currently easily afford. What is your current rate?

I am breaking a 5 year fix coming up next June but the exit fee is £5k and the mortgage outstanding is £500k so a bad rate in a year would easily cost us a lot more per month.

There are mortgage calculators online where you can model what of your 2024 fix was at 3 percent, 4 percent, 5 percent etc.

I have no crystal ball but think it's unlikely we'll see super low interest rates again for a few years.

No I wouldn't personally.

The 5 and 10 year rates will be modelled on what the banks expect to happen. When the outlook looks gloomy to you it will look gloomy to the banks too, you are just as likely to lose as win on the ten year rate. Personally I feel you will not be getting one over on their numbers people doing it this year rather than next, they price all on their best forecasted guess. The rate you are on now is no doubt the cheapest rate available to you for the next year, even without the £7k hit, as you'll have taken it out in brighter times.

i've had my mortgage for ten years now and have always taken the two year rate mortgage, either tracker or fixed, and it's saved me a lot looking back because so far the outlook always turned out to be less gloomy than expected. I take whatever the cheapest option is in the short term as I feel it brings my balance down the fastest and there is less owing to earn the interest on later.

Bubbles what is your current rate and monthly payment?

Our 5 year fixed comes to an end Mar 2023. Our exit fee is about £1300 so it’s on my list of things to look at this weekend.

I’m not a mortgage expert but I can only see them going up. 2% is available now, it was 4.5 when we bought our first house in 2006 and I’d rather lock in 2% now than wait for it to go up before our fixed rate ends.

If our penalty was £7k I’d spend longer doing my sums but may well still go for it.

A 5% penalty seems very high in the penultimate year - are you sure that’s correct?
Not only would you be paying a massive penalty but also increased interest on your borrowing for nearly two years.
run some calculators.
if you have £7k available your cheapest option may be to pay off the loan by that much now (most lenders allow 10% overpayment per year).

I'm thinking about this too so following along to see what suggestions you get. I think there's no shortcut and I'll have to get my calculator out and run some scenarios but the problem (obviously) is we can't predict how quickly rates will rise.

We have about a year left on our 5 year fix and owe c£200k so wondering if there'll be a point where it swings and is worth paying the early repayment fee.

We have been on a tracker and overpaid for a lot of this period so we have done well off the low interest rate.
We are now looking at securing a fixed rare mortgage while they are around 2%, our exit is only about a grand so it's a non brainier for us as the rates are only going one way.

Sorry OP I meant to add 7k does seem a lot to pay out to exit, but I think using the MSE site would really help you.

current interest rate is 1.5% (expiring 2024)
monthly payment (including overpayment) is £1450

Okay well it all comes down to your risk appetite but the way I would look at it is this.

£148k at 1.5% is £185 per month of interest roughly.

if you move to 3% fixed you’ll double that, assume you have 18 months of your rate left so £3.3k plus your fee so your cost is £11k to get out early.

It may well be that rates are at 4% for example when you come to fix, your interest would then be just under £500 a month. If you fixed then at 4% for 5 years you would be paying £9k more interest over the 5 years than if you fixed now. But less than your £11k payment now.

hope that makes sense and is somewhat helpful. Basically in your position I wouldn’t move rate.

@bubblesbubbles11 , we are in a similar position. My current fix ends in 2024 and we were fixed for 5 years at 1.9%. I have found a 10 year fix from Lloyds for 2.3%. Our exit fee is 3.5K. I am thinking about switching because I want the certainty. I can't see mortgage rates being below 3% in 2024.

I wouldn't have thought it was worth paying a 5% penalty to get a new fixed rate now. Plus if you get a 10 Year fixed rate now, the rate is likely to be quite high, so as well as paying the £7k, you'll probably end up paying a higher interest rate than you would leaving things as they are and remortgaging in about 18 months time.

The booking fee that Martin Lewis is talking about is something different. That's aimed at people much closer to the end of their fix, who'll want to do something in the next 6 months, but want to see if rates continue to rise or stay as they are.

That's quite a good fix there, but your early repayment charge is half the OPs. Plus the rate you'd be moving from is higher.

Depending on your mortgage size, it could well be worth changing early.

Both you and the OP probably want to have a look at the 'ditch your fix' part of:

www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator/

@BarbaraofSeville,@BarbaraofSeville

@BarbaraofSeville , sorry about strange post above! Yes that calculator is very helpful, but I think unless you are mortgaging on to a lower rate, the calculations won't reflect the savings, as obviously there won't be any. In my situation I'm trying to lick in at a slightly higher fix than I have now, in the inevitability of much higher IR further down the line. None of us have a crystal ball but I reckon it's safe to say that rates won't be a low as they are this time next year, and as for 2 years, who knows. I am estimating that if BOE raises rates every month for the next 2 years at 0.25%, then by the time my current fix ends I could be looking at a base rate of 5% which could easily be a mortgage rate of 6-7%. That would add 500 odd pounds a month to my mortgage so the exit fee is saved in 6 months. I have no idea if this will happen but its quite likely in my opinion.

Sorry, you are right, my current interest rate is actually 1.9 not 1.5%
I really want the certainty of a 10 year fixed as i am a single mum working full time 2 kids with me, and my priorities are (i) to keep the house at an affordable level for my kids security; but also (ii) to pay off my mortgage as quickly as possible.
The £7odd K early exit fee feels like a lot tho

Can you overpay on the 10 year fixed? And what is the rate?

I did go for that Lloyds 10 year fix for 2.23 percent - you can overpay 10 percent pa but does say that overpay facility can be removed which is worth noting.