Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • davidparfett
    • By davidparfett 5th Dec 17, 9:27 PM
    • 8Posts
    • 1Thanks
    davidparfett
    Fixed rate mortgages that allow you to move home without penalties
    • #1
    • 5th Dec 17, 9:27 PM
    Fixed rate mortgages that allow you to move home without penalties 5th Dec 17 at 9:27 PM
    Hi,

    My current fixed rate mortgage will end soon. It's a lot cheaper to get a fixed rather than variable but I want to sell my house and buy another next Summer.

    Most fixed rates have penalties of 1 to 3% if you redeem the mortgage in the first year which means I'd just as well get a variable.

    Does anyone know how I can get the benefit of a fixed rate but not pay heavy penalties when I move? I don't mind, say, £500 but £2,000 to £6,000 seems excessive.

    Thank you!!!
    David
Page 1
    • Thrugelmir
    • By Thrugelmir 5th Dec 17, 9:31 PM
    • 56,255 Posts
    • 49,621 Thanks
    Thrugelmir
    • #2
    • 5th Dec 17, 9:31 PM
    • #2
    • 5th Dec 17, 9:31 PM
    Remain with the lender you take the fixed term product with and port the mortgage. Top up with an additional product in order to borrow the total the amount that's required.

    Porting simply means that the existing terms and conditions are transferred, i.e. the interest rate, term of the the fix and early redemption penalties.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • haras_nosirrah
    • By haras_nosirrah 6th Dec 17, 7:40 AM
    • 1,329 Posts
    • 2,472 Thanks
    haras_nosirrah
    • #3
    • 6th Dec 17, 7:40 AM
    • #3
    • 6th Dec 17, 7:40 AM
    There is a lender who allows up to a 5yr fix with no penalties for coming out within the 5 years.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • glosoli
    • By glosoli 6th Dec 17, 9:16 AM
    • 675 Posts
    • 388 Thanks
    glosoli
    • #4
    • 6th Dec 17, 9:16 AM
    • #4
    • 6th Dec 17, 9:16 AM
    Just be cautious about signing up to a product with penalties and relying on being able to port because porting applications can be declined.
    • Brock_and_Roll
    • By Brock_and_Roll 6th Dec 17, 9:57 AM
    • 774 Posts
    • 745 Thanks
    Brock_and_Roll
    • #5
    • 6th Dec 17, 9:57 AM
    • #5
    • 6th Dec 17, 9:57 AM
    The OP needs to understand what a "fixed rate" means to the lender. If a lender advances say £200k on a 5 year fix at 4% - they are in effect guaranteeing that no matter what happens to interest rates, the customers payments remain the same. So if Brexit causes rates to balloon, its the bank's problem.


    The bank hedges its risk by taking out interest rates swap agreements. So if a customer wants to break a fix, the bank needs (in theory at least) to break or part-break its IRS agreement.


    So if a customer wants to break after 1 year when rates had fallen to say 2%, then the approx. breakage cost would be £200k x (4%-2%) x 4 (years) = £16,000


    So whilst the banks have a one way street (if rates have risen the customer does not get a credit), there is a real cost to the bank if rates have fallen.
    • xyz123
    • By xyz123 6th Dec 17, 6:52 PM
    • 1,505 Posts
    • 368 Thanks
    xyz123
    • #6
    • 6th Dec 17, 6:52 PM
    • #6
    • 6th Dec 17, 6:52 PM
    As said, you can port the mortgage subject to valuation and affordability checks.

    Not a recommendation but we took out 5 year fix with Coventry earlier in year and it has no ERC.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

213Posts Today

1,580Users online

Martin's Twitter
  • RT @bearface83: @MartinSLewis check out the @Missguided new 60% off offer. Upping the cost of items almost double to make us think it?s a?

  • RT @efitzpat: Thank you SO SO much @MartinSLewis for your Student Loans refund advice! I just got a grand refunded right before Xmas! Whoop?

  • Have a lovely weekend folks. Don't do anything (fiscally) that I wouldn't do!

  • Follow Martin