Remortgaging choices - which one?

[QforCucumber]

Just had an email from current provider saying we are due to go on their SVR of 3.99% shortly and to go on their site to see what can be offered.

Have had a look and they are offering 4 year fixed at 3.34% which is our current rate so no changes really, same term etc or 2 year fixed at 2.44% - during which we would plan to overpay the saved difference (only £60ish a month) so when it came up again in 2 years we will have reduced the term and the amount owed.

Issue there is not knowing how much rates are going to increase in the next 2 years and if we would be shooting ourselves in the foot only going for a 2 year fixed.

Does anyone have any words of advice which might help me choose?

It depends what your circumstances are - there are no right or wrong answers. All I would say though is to shop around - those rates look quite high for a 4 year deal (there are plenty of deals around 2% for 5 yr fixes - although it obviously depends on your LTV). I think rates are only going to go higher, its just a question of when.

Also, look at the actual saving when you factor in any product / application fee (plus associated costs if you're moving lender - survey / legal costs). Also think about whether you are near the next bracket of LTV - so for instance, if your LTV is say 81% at the moment, you can only apply for products where you have a 15% deposit. In a couple of years maybe, you'll have paid down your mortgage slightly so you might then be able to access deals where you have a 20% deposit (i.e. your LTV has moved to below that 80% threshold). The bigger your deposit, the better the deals become - which is something else to bear in mind when you are considering whether to tie yourselves in to a longer term product.

Also think about other potential changes in your circumstances - job security, wanting to move, have children etc which could all impact on getting through affordability if you needed to re-apply.

Thanks mandy

The issues you mention are where I'm struggling I think, I'm due to go on maternity in 4.5 months and DP has just left self employment and gone back into employment so has no employed work history really, hence us looking to stay with current provider - They have advised no fees and charges for the change as we are not borrowing more. We are on 67% LTV - I'm edging towards the 2 year lower fixed and overpay as much as we can so in 2 years time we have a much reduced borrowing amount to shop around with.

You need to speak to a broker. London and Country are great, and have access to deals which you won't find on the banks' websites.

What is your loan to value? The rates you've quoted sound very high, especially the 5 year fix... No one knows what rates will be in 2 years, but if you look at the difference between a 2 and 5 year fix, it isn't huge with a lot of banks, which suggests that even the banks don't think they'll go up that much.

Your best bet would really be to speak to a broker

X-posted...

What is the difference in your monthly payment between staying on the SVR at 3.99% vs your current rate?

If it isn't much, I would be tempted to potentially stick on the SVR for a month, until your DP has a payslip, and then apply for a better deal with another lender. Over the course of the year, you could save more - as Mandy said, there are plenty of deals sub-2% for 2 or 5 year fixes on your LTV

The only thing to bear in mind is how your income is taken into account when you are on maternity leave. When we remortgaged in 2010, I was on maternity leave (due to return in 3 months' time) and there were lenders who would not consider my income (even with a letter from my employer saying I was returning on X date, same job, same terms and conditions). So whilst I agree with sparechange that it might be better to shop around when your H has wage slips etc, just be careful if you do go down that route that you've done your homework about lenders and maternity leave.

I'd also recommend a chat with L&C - we have remortgaged (again!) this year and they were excellent. They are free and will search the whole of the market for you (if you do decide to go with a mortgage product they recommend, they get a commission from the lender).

mandy
The OP should have a window where she is still working and her DP is in employment which could mean they both have payslips to provide.
It depends how the questions from the lender are worded about future income as to whether they would have to declare the upcoming maternity leave though

What year did you take out your mortgage?

MMR has changed things - a lot. You might struggle to remortgage with your current providor.

hereand 3 years ago, but have been advised the new affordability checks are not used when remortgaging with the same provider and not borrowing more. however, DP will be in a more secure position now than he has been over the last few years when self employed, a new guaranteed salary and pension with sickness benefits and holidays which is all a considerable amount more than his self employed income, and I am going back to work full time after 9 months of mat leave, family looking after baby so those things aren't really issues.

Thanks all, will sit down with numbers and work it out - hadn't even thought about waiting until DP has been in his job a few months and then trying, so having the SVR for a few months.

A crystal ball to know when rates will increase and what to would be perfect right about now.

I don't want to sound like a stuck record but speak to a broker. Let them do the numbers and work out a few options for you. There is no cost if you use London and County, and no obligation to take it any further if you want to stay with your current lender but they will have more options and know which lenders will only ask for 1 month of his payslips, or won't penalise your mat leave
Doing it yourself means you might miss out on a much cheaper option, although even they don't have the crystal balls...