To re-mortgage or not?

Poonum_2

Our 2 year fixed interest only period with Nationwide comes to an end in February, and we don't know whether to re-mortgage and start making re-payments, or carry on with the interest only mortgage until we move house, which we are definitely going to be doing in the next 18 months.

The 2 year fixed rate was 4.95 and if we carry on with the Nationwide once it expires in Feb, it automatically goes to their base rate which is 6.5 i think - so we will be paying quite a lot more in interest. We would put money by in a saving account each month in our own repayment fund, which we'd put towards the cost of our next house, but 6.5 is a lot more to be paying in interest...

The best deal we've been offered for re-mortgaging in Feb and starting to make repayments is actually 4.95, the same as our current offer, which is pretty good considering we got that 2 years ago. This is a 2 year deal with Cheshire. BUT of course to re-mortgage we also have to pay a couple of thousand pounds in fees to set everything up, and then have the conveyancing done etc. I made sure this mortgage was portable, so that we could take it to our next house and not be charged a redemption penalty.

Considering we will def be moving house in 18 months or so, do you think it would be more cost effective to just carry on with the Nationwide paying interest only, even if it is at a higher rate? Or would it be better to pay all the re-mortgage fees, port the mortgage to the next house, and then re-mortgage all over again when the 2 year period with Cheshire comes to an end??? Advice appreciated!

UK007BullDog

Ask if Nationwide lets you port the mortgage in the future, they offer you as a new deal to stay with them. Have you actually asked them what they will offer you. They are pretty good at retaining their customers.

It may be cheaper to stay with Nationwide (no solicitor fees, no survey fees) for another 2 years. Be flexible and do not move for 2 yrs. Why make your life and your finances suffer by limiting yourself to 18 months? It may not happen anyway in exactly that time frame, who knows what the future will hold.

Also going with a small lender like that is quite "niche" and you might not have the flexibility as with a Nationwide mortgage.

But staying on their SVR will be a bad move as the rates will go up. the next review is due on the 11th of Jan.

herbiesjp

I owuld suggest looking for a deal whose fees will make it worth while moving - you do not give any actual mortgage figures but there are plenty of deals with free legal fees and valuation and either low or no arrangement fees. It does not sound like "paying a couple of thousand pounds" will be making the move worth while.

HTH

UK007BullDog

Forgot to add there are lenders out there offering exact 18 month deals but due to the speciality could be expensive to buy due to their fees.

Poonum_2

thanks, yes we did get offered a repayment deal with nationwide, it was also 4.95 BUT their set up fees were more than cheshire's. the good thing is they are both portable, so when we do move there will be no penalties.

we would like to start making repayments, but we have a wedding to pay for in august, so carrying on interest only is appealing. do you think nationwide would offer us another interest only deal that is portable??

UK007BullDog

Maybe? Why not? As you had it before. They might tell you though that it is imperative for you to go to repayment eventually to start clearing the debt.
You might want to have kids in the future etc. That all costs money. Unless you already have kids