remortgage (i think?) where to start?

juliedaisy1

hi i have two mortgages with one lender (nationwide) one property but when we moved home the mortgage was still fixed so they (NW) said to take out a second. the problem has been they have both been on different times for finishing the fixed period which has meant i have been stuck with the nationwide as they were never inline with each other. however with the low interest rates when the first one finished its fixed term i left it and now the other has finished so both now on variable. hope this is all making sense??

anyway now both are off the fixed term this means i can now move both of them if i want to (this is remortgaging i think?) and i just do not have a clue where to start. i have looked at the sites martin recommends but then i do not know if i should go for capped, tracker or fixed. can anyone point me in the right direction - i am worried interest rates will go back up and i am left on a variable not finding a good rate. where do i start?

any help would be really appreciated -thank you jules

luckyfool

You can either take a new product from Nationwide on the whole shebang (check with them what they will offer), remortgage the lot to a new lender, or option 3 is to sit tight and do absolutely nothing and stay on Nationwides BMR for the time being (2.5% assuming that is what your documents say).

If you are keen to fix for medium to long term then you need to workout roughly what loan to value you will need and either do some research or get a broker to do it for you.

juliedaisy1

hi thanks for the reply. whether i sit tight or go for another fix is that just reliant on how much of a risk i want to take? how do i decide whether to fix again or would a tracker be the best option? i suppose these are things no one can tell me - do i just take the risk one way or the other?

luckyfool

To a degree its about your acceptance of risk, but it might also come down to opportunity. i.e. If you have no equity in your property or are over 90% then it is likely that you will be stuck and unable to fix anyway... or might only be able to fix at a very high cost.

If you have 25% + equity then you can fix for 4-5 yrs at between 4.5 and 5% potentially. Then you need to compare that to 2.5% variable with no fees or ties which you have just now. In that scenario I think you would probably pay less staying on the variable rate, but that doesnt mean that would be right for you, or even what I would do in your shoes. If you worry about rates, and would struggle to pay your mortgage if rates went up significantly then you are probably going to be better off fixing for some peace of mind.

juliedaisy1

thanks for the help - feel less stressed that i need to do something iminently so thats good

getmore4less

juliedaisy1 wrote: »

hi thanks for the reply. whether i sit tight or go for another fix is that just reliant on how much of a risk i want to take? how do i decide whether to fix again or would a tracker be the best option? i suppose these are things no one can tell me - do i just take the risk one way or the other?

Think about what the risks and how they might impact you
Here are what I think are the 3 main ones.

Interest rates may change.
If on a variable rate this can change in two ways

1. base rates rise.
anyones call, I think they will stay lowish and not rocket up. this means short(2y) term fixes are not a good option, longer term(5y) are worth considering

2. lender changes their margin.
Nationwide SVR is competative and low risk(IMO) that they will move much from base+2%

If Fiixing this avoids the above till you come to the end of the fix and then you are on the follow on rate or need to try and remortgage, any new deal will probably reflect current rates so making sure the follow on is competative is important part of the consideration


Property value may change
Key problem here is LTV since this impacts what rates you will be offered.
If allready high LTV then this is a highish risk ATM expecialy if a move is considered since this become more difficult.


Income may change.
Two sub risks here
1. Loss of income
Need a plan to cover the outgoings for some time, usualy an emergency fund of say 6months expenses more if jobs are hard to get.
2. loss of disposable income.
This is where you expences increase giving you less spare money to cover any increase in mortgage payments.
A good budget should mitigate this risk, examples might be a new car or kids expenses that have not been planned properly.


IMO the best thing any one can do to reduce risk is get the debt down, so lowest rates and bigger payments can in many cases reduce the need to fix for the security of a known payment.

In assessing the above 2 main things
LTV, is this allready good or does something need to be done.
Surplus income which determines the maximum rate you could pay.