Fixed rate ends in September - what to do?

chilipepper38

Hi I'm new here. My house is currently on the market but after 18 months it's still not sold. We have a fixed rate mortgage which ends on 30th September. When we eventually move we will be adding about 40k to our mortgage as we need a bigger house so I'm pleased that mortgae rates have fallen considerably it means we can go to our limit. However my dilemma is that I doubt they will drop any further, they can only go up. I'm worried they will go up before September. We have a redemption penalty of £1,100 at the moment. Do I get a new fixed rate now and pay the penalty or do I hang on until September??

Cheers

adandem

Hi, are you saying that you'd take out a mortgage now to cover the £40k extra you intend to spend?
If you do this, you still may not sell your house in the near future so you're making mych bigger repayments. Also, the new mortgage would be based on the valuation of your current property so adding £40k could increase your LTV considerably and mean you're not eligible for the best rates.
Even with a fixed rate I'd be cautious about going to your limit tbh, the rate will end and as you say rates may well rise and you could find yourself struggling.
If it were me I'd sit tight until your own house is sold and you'll know exactly how much more you need to lend and save as much as you can in the meantime.;)

unite79

Defo, What would happen if the new lender did not allow you to Port the new mortgage - You would be stuffed - Wait until you sell.

Altough you may hit Criteria now, this is changing EVERY day.

chilipepper38

Hi thanks, sorry I wasn't very clear. I wouldn't add the 40k on now. It's just an approx amount that we would have to add to afford the type of house we need. We have no choice as we have a disabled child and this house move is for her so we can have adaptations put in place. Suitable housing with land to build on is expensive which is why we have to push ourselves to the limit. I've read some of the other posts about interest rate predictions and some state a possible increase towards the end of this year and into next which is why I'm not sure whether to act now to get a 5 year fixed rate or gamble and see how the land lies in September. We may not sell for months yet but I would like the cheapest rate I can get.

Cheers

unite79

I dont think you will see big Interest rates before September - And bearing in mind you are talking about a reaonable redemption penaltly - namely £1,100 equating to £375 per month (June July August) - it will take 6 weeks for a re-mortgage to go through! - I would wait till July, then if you want certainty Book a fixed rate - But personally I would wait until you have sold - so the new lender is a definate goer - Changing and then porting takes away the guarentee - changing criteria and refussal to port is becoming more the normal - especially if as you say you are near the maximum - Example being you need 4 x - then lender resticts maximum borrowing to 3.5 x.

Your reason for moving, soundsvery sensible, providing the right enviroment for your child will mean everything.

chilipepper38

My mortgage is with Halifax at the moment. I'm guessing they probably don't have the best rates although I have a mortgage promise in place for the next 6 months stating what I can borrow. It would be easier to stay with them but more sensible to shop around??