Time to remortgage...help!

[polkadotpixie]

I know very little about mortgages (I've always just gone with the repeat fixed term before) and it's time for us to remortgage. We have a few options and I don't know what's best and DH has just said "do what you want" which is super helpful!

We currently pay £573/month at 2.39% but actually overpay a bit so pay a round £600

I'm quite risk averse and am worried about interest rates going sky high if we went for the cheaper tracker option given the current financial climate so I'm inclined to go for the fixed rate but 2 or 5 years...do I go for 2 and hope the interest rates drop before then or do I go for 5 and hope I don't end up paying loads extra for the final 3 years that I didn't need to pay?

Money is relatively tight but not critically so and I really want to continue overpaying if possible as my mortgage term lasts until I'm 71 and I'm hoping to have it paid off by the time I'm 67

Please help!

Sorry, forgot to attach the options we have from Santander...2, 3 and 5 years

I'm remortgaging at the moment and we're going for 5 years, rates are going up so quickly and being pulled all the time and I just don't think they'll fall back as quickly with everything that's going on. Our fees to exit the fix fall every year so if things do get loads better in say 3 years it's not so bad to get out of it

No contest for me 5 years - saving the 1k fee on the 5 years compared to 2 years is quite a benefit too and I think the interest rate is a decent one fixed for 60 months.

I've just gone for a 7y fixed zero product fee.

Go with three years, same price as two year fixed.

Although why are you only looking at Santander? There are many other better options at the moment.

What's your loan to value?

Our house is probably worth about £210K and we owe £157K on it (we paid £193K for it in 2020)

I could move mortgage providers but my husband is self employed and it was a pain getting a suitable mortgage in the first place as his income isn't very high (about £16K) although mine has increased to about £26K now so I'm not sure if other providers would lend to us?

We've never missed a payment or anything but we're not high earners

How long is your mortgage left to run?

Of those options I’d probably do 3 years, and overpay to £700, if that’s doable to you.

Two years feels very short in the current climate of rising rates. It seems unlikely they’ll keep rising then drop back just as quickly, so 3 years hedges your bets if you want certainty. I certainly wouldn’t pay the £1000 fee option on 2 years.

Our fixed rate mortgage runs out on 02.12.22 but we have 33 years left to pay on the whole thing

I'm 38 and DH is 35 so we bought relatively late and I ideally don't want to work past 70

We could probably stretch to £700 just about but we're hoping to have another baby, although we have a lot of family help so have very low childcare costs we'd still have to consider maternity pay, although mine is pretty good as I work for the NHS

I would go 5 years myself. The rate is already low in historical terms. You don't know what interest rates will do in 3 - 5 years but you will know that you should be able to afford your mortgage.

I would go for the 5 year fixed. If money is tight why take the risk of having to pay 5/6% in 2 or 3 years time? Could you afford your mortgage at 5/6/7+?

The BOE is meeting tomorrow and expected to put the base rate up by at least 0.5%. There will be many more hikes on the horizon. I wouldn't go tracker.

No one knows for sure what the next few years will bring, but there certainly seems to be concern that rates will really sky rocket. See this thread...
www.mumsnet.com/talk/am_i_being_unreasonable/4604082-inflation-to-hit-15

I think knowing you can afford your mortgage for next 5 years has its own value in this economic climate.

We've just gone for a 10 year fixed. Not sure if it was the right move. But the theory was that interest rates have never in history been as low as they have been in recent years. When we bought our first house in 2007 the lowest rate at the time was 4.5%.
I may end up regretting it but at least we know where we stand for the next 10 years and hope to pay a good chunk off as we can afford to overpay at the moment.
I am nervous tho

Just to add fixed rate is definitely the right choice but my previous message was referring to whether we should have gone for 5 years instead of 10 x

We just refixed for 5 yrs, happily

We fixed for 10 years too. Our theory was rates have a lot of room to go up and very little room to go down.

We have been in a period of historically low rates. I think the average that mortgage rates have been since the 1950's is about 6%.

If your remaining term is already 33 years, and you hope for another child, then I’d take the 5 year fix, OP.

Different choices if you’re at a different stage, but from what you’ve said, in your place I’d fix even if that meant I might overpay for a year or so of the 5.

It is always worth checking the whole market and not just going with your bank.

Mortgage brokers cost between £400-500 usually and are worth their weight in gold.
We managed to get a rate that isn't on the normal market recently and previously with my first house on my own I managed to borrow more than what the calculators said.

You'll earn the £500 back in the 3 or 5 years with a lower rate.

You have a good LTV and a good income 40k = around 180 if there is no major debt.

Lots of people miss out on good deals thinking the other banks won't lend to them, or that they're asking a favour almost by being given the mortgage. The banks earn ££££ from mortgages, view it as they need to work for you and get you get best rate through a broker.

Sorry for sounding like a broken record but I have several family members who did the same and just stayed with their bank for years and wasted so much money.

Go five years. Foolish to do anything less. The economy is turning to shit. This is only the start.

I’d fix 5 years and I would do it ASAP, I’d say tonight / tomorrow first thing but of course you need to be happy before you fix. Bank of England meeting is tomorrow and so Santander will raise rates almost immediately in my opinion. If you look around at different banks you will likely have a higher rate due to the time it will take to get the offer, given interest rates will almost certainly rise tomorrow. I’d take 5 years certainly at that rate.

I'm in the process of re-mortgaging for the end of Dec 22, going for 5 years fixed.
Might still be worth going through a fee free broker like London and Country to see if you can get a better deal elsewhere

That rate is likely to increase tomorrow. I don't have a crystal ball but a tracker would be out of the question for me. If you are risk averse you should fix for as long as you can - the rate is the same for 2,3 and 5? I don't think anyone is expecting rates to come down to where they were.

I used London and Country brokers , really good and free.
I'd also say 5 years.

Thanks everyone. I had no idea the Bank of England was planning to raise interest rates tomorrow so I'm very glad I posted!

I've gone for the 5 year fixed, £0 fee option...I had a quick look on the comparison sites and whilst we might have been able to save a few £'s a month if we'd shopped around, after knowing it's likely to go up tomorrow, I just couldn't risk waiting

Well done!

I would have done that too

Totally agree with your decision OP!