Moving house - port part of mortgage or get new fixed deal?

mrsp80

I think I know the answer to this but just wanted to post to check if there were any other factors to consider!

We are hopefully moving house - had an offer accepted and a buyer for ours, so touch wood (in a combination of excitement and nerves!).

Have looked at a few mortgage quotes and got some very competitive ones from Nationwide and HSBC.

Basically the quotes are for just under 4% fixed for 3yrs.

However our current lender has offered to port our current mortgage (which will be approx half our mortgage if we move to the new place) which is on the Base Variable Rate at 2.5%.

[Edit - I should have mentioned current lender is Nationwide with lifetime tracker of base rate + 2%, unlimited overpayments and payment holidays - which I think are beneficial].

However, I know that rate is very competitive currently but it could change. With the bigger mortgage our payments will be higher and our budget tighter so we are keen to know what our payments are.

I figure that even if the base rate increased by 1.5% we would be better off with the fixed deal - and even if not I suppose we know we can meet the payments so it's safer.

Also a financial advisor once told me that splitting your mortgage can make things awkward / expensive when you want to rearrange, i.e. you have to keep them separate and pay twice the fee.

Can anyone help me out on this?

Thanks :rotfl:

Wh05apk

You need to look at the total cost, your existing lender may have a higher rate for the additional part, which will make the overall cost higher.

With rregards having the mortgage in two parts, this is not a concerm as the SVR part could be replaced at any time, it is only when you have 2 different deals where bothe are tied in with different end dates that it becomes a pain.

mrsp80

Thanks. Over the phone they told me I would get the same rate as I would if applying for the fixed rate for the whole mortgage. If that is the case then I suppose the risk of porting part of the mortgage is just that if the base rate increases it could increase our mortgage payment (although for the time being it would be nice and low!).

Thrugelmir

You need to look at the longer term picture. As a 5 year fix covers you against interest rate rises for just that period. What rate would you move onto once the fixed term ends?

mrsp80

After the fixed period ended on the fixed portion of the mortgage (i.e. the new lending) we would move onto standard variable rate. I suppose the existing part of our mortgage would remain on base variable.

dimbo61

You need to look at the whole deal including costs ?
Now moving lender and taking out a fixed deal for 3 years may cost you more than having say 50% on a 2% + basse rate tracker for life and 50% on a 3/4/5 year fix at 4/4.5% .
You overpay ( if you can afford to) the part with the highest interest rate and you are protected a little by having part of the mortgage on a fix

mrsp80

dimbo61 wrote: »

You need to look at the whole deal including costs ?
Now moving lender and taking out a fixed deal for 3 years may cost you more than having say 50% on a 2% + basse rate tracker for life and 50% on a 3/4/5 year fix at 4/4.5% .
You overpay ( if you can afford to) the part with the highest interest rate and you are protected a little by having part of the mortgage on a fix

Sorry - both options are with the same lender.

Booking fee is £99 with £300 cashback which covers the valuation I suppose.

3 year fix is at just under 4%. Base variable rate is 2.5%.

I'm veering towards being cautious and getting the 3 year fixed deal so we know what we are getting - still open to opinions though

milanos

Completely only my opinion but I would port part of the existing one over and then fix the latter part, giving you you a half way house type scenario. The good thing about it is that you can change the ported part to a fix at any time, should you want. Obviously if the rates start to go up then you'll lose out but I think there's a decent chance you'll be able to fix it a few months down the line without an increase in rates, meaning you'll have taken advantage now.

dimbo61

I know that both parts are with Nationwide and you dont want to lose the current deal so easier and you also get cashback to stay with them and borrow the extra at a fixed rate for the next 3 years. moving lender will cost you at least £1000 in fees ,legals, exit fees, searches etc plus you wont see 2.5% again.
overpay the fixed part