Remortgaging after fixed period - how long to jump ship?

reverend

Hello all,

I wonder if you can help. I have a fixed rate with Abbey coming to an end on 3rd November for my Shared Ownership flat (40% owned). The rate that I was on was 5.49%

Abbey have offered me a new deal of 5.94% fixed for 3 years with a £399 fee.

That represents an increase in monthly payments of about £26, plus the £399 fee of-course.

I could stretch to this, but i would like to go out to market to see if i could get something better. The trouble is, I have left it so late, and I imagine that changing mortgage providers would be a lengthly process (4-6 weeks some posts here say). I have one of the no-fee brokers scouring the market now and they are due to call me back in 10 minutes, but i was wondering, am i likely to get into trouble if i move to another lender having left it so late? and would i avoid that by sticking with Abbey?

Thanks for any advice that anyone can give.

oh, I would have to pay Abbey £275 to leave them apparently

rev

Locoblade

It may take 4-8 weeks (or longer in some cases) to change to a different lender, but if you can find a better deal elsewhere, there's no reason why you can't wait that long.

Your mortgage obviously doesn't terminate with Abbey at the end of the fix, you'll simply revert onto their standard variable rate or equivalent. Given the recent drop in BoE rate, their SVR might not be much higher than what you're paying now anyway, so if you can find a better deal elsewhere then it could work out beneficial to drop onto SVR for a month or two and change lenders rather than stick it out with Abbey.

hethmar

The other thing to think about is that a lot of the lenders are charging HUGE arrangement fees at the moment plus youd have to pay for a valuation.

herbiesjp

Has the broker come back to you?

Have you thought about fixing for longer?

If house prices are still going down, you may fall into a higher loan to value bracket and therefore and could miss out on other deals after 3 years - 5 years may be enough time for the market to have started recovering

It all depends on your actual figures as to whether this would be relevant

hethmar

Yes, that is a point, a new lender would have a new valuation which could cause a real problem for you now. I think I would stay with your current lender.

reverend

Thanks all,

The broker did come back to me. He had a better rate but with an £899 fee, and advised me to stay with the Abbey.

I hadn't considered a 5 year, but I expect to be selling the place after no more than 1 year. Its 1 bedroom and we now have a little baby....this place is filling up quickly with brightly coloured plastic tat.

Would it be foolish to take a 3 year fixed term if i am to sell after 1?

latecomer

A lot of mortgages are portable which means you can change properties without repaying it so you could get a 5 year term as long as its portable. Definitely worth looking into.

hethmar

Good luck and congrats on the baby

reverend

Thanks everyone! Great help as always