Fixed Rate versus Variable Rate Re-mortgage (shared ownership)

portland_bunnies

50:50 shared ownership terraced house with housing association. Two year fixed rate mortgage ends this month and financial advisor says to go for 2 or 5 yr fixed deal with £1250 fee as he says it will be very difficult finding a fixed rate deal later on when interest rates begin to rise. Do I go for this or let mortgage drop onto current variable rate with existing lender? Thoughts please.

Met_Bobby

Your adviser's opinion is valid. Any other thoughts would be no more or less valid than this (from a qualified person). If you don't trust your adviser then go somewhere else. Or try to do it yourself.

brightbuy

You could book in a rate now but hold on to your mortgage offer when it comes (usually six months), in the meantime sit and benefit from the lower variable rate when your current deal ends. This will also allow you some time to watch the market and see what happens with the fixed rates.

This is of course assuming your variable rate will be lower than your new deal.

betmunch

Ask yourself what do you want from your mortgage rather than gamble on what interest rates may or may not do.

If you want stability and are happy with the payments fix now.

If you dont mind the fact rates may go up as well as down then wait and see what happens.

Nice and simple

dimbo61

How much equity do you have in your home ?
Taking a 5 year fix and overpaying ( check if allowed ) would give you a chance to build up the equity in your half of the property and even buy the other 50% in 5 years time when your mortgage is much smaller.
This depends on what you can afford, income, rent on 50% to housing assocation, cost to buy other 50% .
Can you afford to overpay big time if you drop onto the SVR for a couple of months or even a year !!

portland_bunnies

I don't know what equity I have as my IFA says the lender won't tell him! Having read some other threads and comments, it seems that there are deals which have much lower fees eg £299 - Q: why am I being charged £1250? Is it because I only own 50% share do you think? Otherwise I think perhaps the fixed deal may be wise and if the repayment is lower than my current one, I will see if the lender will let me overpay.

dimbo61

The fees at £299 nationwide ! are for less than 60% LTV for existing customers
alot of 5 year deals have fees of £995 +

portland_bunnies

Back to my IFA I guess and double check figures but think the 5 yr fixed rate looks like best option. Thank you to all who replied.

dimbo61

Speak to your existing lender yourself and find out what there 5 year fixed rate deal is and costs for existing customers !