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Original poster

Mortgage - renewal options, thoughts appreciated!

26 replies

Furries · 23/03/2023 15:35

My fixed deal finishes at the end of May. I’ve been keeping an eye on things and have held off doing anything to date. But am thinking that now is the time to secure a deal (with a view to amending it before the deadline if needed). I live on my own, so decision is down to me.

Duration remaining is 14 years. LTV is 37%, so am already accessing the best rates available. Options are:

2 Year Fix - 4.44%

2 Year Tracker - 4.24% (Base Rate + 0.24%)

3 Year Fix - 4.39%

5 Year Fix - 4.04%

10 Year Fix - 4.34%

Am pretty much excluding the 10 year deal.

The additional monthly cost for the 2/3 year fixes and the tracker is around £200 - £210 per month more than I’m paying now. The 5 year fix is around £165 more per month.

Am leaning towards the 5 year fix for peace of mind. With the aim of overpaying small amounts where possible during the term. Does this sound sensible, or is there more merit in considering the first 3 options further?

Am not normally this indecisive, but could do with some outside viewpoints.

OP posts:
Aquarius1234 · 23/03/2023 15:44

I am similar and have gone for 5 year fix at 3.9, but now I am thinking I should have gone for 2 year fix.
Do you know if you can ask to change once you have agreed online and got the paperwork?
Mine starts 1st July.
I just didn't like the idea of paying nearly £50/60 pound more for the 2 year fix. But maybe it would go below 3.9 in 2025?

Aquarius1234 · 23/03/2023 15:45

Mine is for another 30 years..

Overthebow · 23/03/2023 15:46

If you can still get the 5 year fix at that rate I’d go with that. The interest rates have been raised again today to 4.25%.

AlltheFs · 23/03/2023 15:49

We have similar metrics but a longer term and have gone for 5 year fixed.

If rates crash in 3 years time I’ll consider switching early and sucking up the charges. But I don’t think they will.

We have high outgoings at the moment (childcare and elderly expensive equine) so need repayments to be low. Life will look different for us in 5 years.

AlltheFs · 23/03/2023 15:50

Our new 5 year fixed today was 4.13% (no fees), but my IFA expects it to be pulled. It was a product transfer so easy to implement. We’d hung on as long as we could (our current fix ends in April).

Thebreakfastclub2023 · 23/03/2023 16:00

Historically, I always went for a two year fix but if I had to decide now I would go for a 5 year fix and overpay by 10% each year. It depends what going on in your life. For example, I fixed my energy for 2 years in October 2021 because I knew that would take me to my DC going to Uni. Everyone including ML was saying don’t fix, don’t fix but I just thought to myself I’d rather know how much by energy bills are going to be for the next two years. As it turns out I have saved thousands by fixing my energy but equally I was willing to pay the extra £30 to £40 a month by fixing at a higher rate at the time )before the energy prices skyrocketed). Only you know your family situation, attitude to risk and what you are willing to absorb as a financial hit should your decision result in a hit. Hindsight is a wonderful thing but unfortunately non of us can see into the future. For me peace of mind knowing what I would be paying for the next five years would win. If only I had invested in Amazon, Microsoft or Dominoes all those years ago I’d be rich now but life’s not like that however, I still play the lottery🤞

SeasonFinale · 23/03/2023 16:03

If you haven't applied I suspect they are all pulled now

OfMark87 · 23/03/2023 16:09

I'd go with a 5 year fixed (MA here)
Be quick or they'll be pulled

Aquarius1234 · 23/03/2023 16:21

I did hear that fixed rates are still going down slightly even with the rising interest rates.
But may stop now?

Callmenat · 24/03/2023 06:45

Interest rates aee very likely to fall as inflation drops. I would fix for 2 years and then 5 at next renewal. There is a reason why 5 year fixes are currently lower than 2 and that's because the expectation is an interest rate drop.

usernotfound0000 · 24/03/2023 06:52

We've just renewed this week on a 5 year fix. Was toying between the 2 and 5 year but would like the security of the 5 years. Our rate with Santander was 3.99% so pretty happy with that.

danni1977 · 24/03/2023 07:06

Probably better to act quick because of the interest rates going up again yesterday, we've been looking at this a lot recently. I read an article on moneypeopleonline recently about interest rate forecasts. Predictions suggest and rate rise later in the year and house prices to drop 10% as well but that's not going to affect you. 2yr is OK or 5yr if you want a bit more stability... rate isn't bad tbf

tootiredtospeak · 24/03/2023 07:12

I would go 2 forecast even with BOE rise is that we wont go into recession this year. In 2 years its 5 years post Brexit and covid.

TheTeenageYears · 24/03/2023 07:46

I would go with the 5 year fix. Historically that would have been considered a very good rate - the last 10 years have been the exception rather than the rule.

Winewednesday · 24/03/2023 08:04

Have a check today, Nationwide rates have come down ever so slightly

Mamofteenager · 24/03/2023 08:11

I fixed yesterday for 5 years, the extra cost is £10 per month then what I currently pay. Yes rates could decrease in 2 years however, I appreciate the security of knowing my payments for next few years. I plan to overpay if possible

Original poster
Furries · 24/03/2023 10:42

Thanks for all the replies. It’s like you are all living inside my head, as each of the responses are pretty much the back and forth reasonings I’ve been having with myself!

Am aware re the logic of why 5 years is currently lower than two. But then I keep thinking five years ago, who would have predicted that we’d have a pandemic, war and an energy/COL crisis!

OP posts:
Original poster
Furries · 24/03/2023 10:44

Winewednesday · 24/03/2023 08:04

Have a check today, Nationwide rates have come down ever so slightly

Thank you for this - have just checked and all options have come down. Off to crunch numbers again and make a decision.

Will report back.

OP posts:
Toooldtoworry · 24/03/2023 10:49

One other question. Does the tracker have any early repayment charges?

Original poster
Furries · 24/03/2023 11:10

Toooldtoworry · 24/03/2023 10:49

One other question. Does the tracker have any early repayment charges?

Have just checked. For the tracker, no ERC and also unlimited overpayments.

For the others, sliding scale of ERC and overpayments are 10% annually of original loan amount.

OP posts:
Original poster
Furries · 24/03/2023 11:12

Also, I’ve just checked and, if I secure a deal today, I can change it if rates become more favourable in the meantime. They’ve advised, to be on the safe side, to allow 6-10 days before my current term ends.

OP posts:
Winewednesday · 24/03/2023 11:15

No worries @Furries I am in the same position. My mortgage is due to expire 31st March. Deal already locked in but have the opportunity to change.

Original poster
Furries · 24/03/2023 21:12

Just to update, have gone for a 5 year fix at 4.04% and no fee. I could have got 3.94% with £1k fee added to the loan, but it was £1 per month less and would have cost a few hundred more over the term of the fix.

I can cancel and take a new deal up to around 6 days before current term ends, so will be keeping an eye on rates up until then.

My reasoning was that I valued certainty and a slightly lower monthly payment. It’s a really old house, so things often go wrong, and having that bit of wiggle-room is definitely worth it to me. Plus, if I can, it gives me a bit more scope for occasional small overpayments.

Thanks again for your feedback, was definitely good to see that my internal musings were along the same lines as others.

OP posts:
Callmenat · 25/03/2023 07:45

Furries · 24/03/2023 21:12

Just to update, have gone for a 5 year fix at 4.04% and no fee. I could have got 3.94% with £1k fee added to the loan, but it was £1 per month less and would have cost a few hundred more over the term of the fix.

I can cancel and take a new deal up to around 6 days before current term ends, so will be keeping an eye on rates up until then.

My reasoning was that I valued certainty and a slightly lower monthly payment. It’s a really old house, so things often go wrong, and having that bit of wiggle-room is definitely worth it to me. Plus, if I can, it gives me a bit more scope for occasional small overpayments.

Thanks again for your feedback, was definitely good to see that my internal musings were along the same lines as others.

It's good to see that rates aren't ridiculous by any stretch. When it all went crazy after the Truss mini-budget last year it felt like rates were going to be bonkers. My fixed rate is due in October and hopefully they'll have gone down a little but who knows!

Original poster
Furries · 25/03/2023 11:59

@Callmenat - I know, it was a relief to know that the rates weren’t ridiculous. I, too, panicked a bit at how rates were looking after the mini-budget and was seriously considering paying 3 months ERC and locking-in a deal then. Am so glad I risked waiting, I would have been on around 5.5% otherwise.

OP posts: