Remortgaging? Overpayments?

Latsie

In January my mortgage fixed product ends. It was 5.49%. Should I just revert to the banks 2.49% variable rate or should I be seeking to remortgage? I'm thinking I should just stay with the variable rate for now.
Also if I plan to move in 5 years time am I better off now making overpayments on my current mortgage to get the balance down or should I be saving as much as I can in an ISA to use towards a deposit when the time comes in 5 years time. Your thoughts as always will be appreciated.

originalmiscellany

Well, it's the same question that gets asked most days.
Do you think that interest rates are going to increase in the next few years? I don't think they will for another 2 years, but then it's just opinion and we're in completely uncharted territory.
If you do remortgage, you will get a much higher rate than 2.49 variable rate... If I were you I'd keep it at the Variable rate and overpay as much as I can, so when interest rates do increase (say in a years time) you have a smaller deposit. Also, what mortgage are you thinking of moving to? An offset? A fixed? a tracker?

For what it's worth, I think I'd pay the mortgage down rather than saving just because I'd always clear what I owe asap.

Wh05apk

Unless you are convinced interest rates will rise, and that would cause you a problem, then I would almost certainly stay on the 2.5%, as you will be unlikely to beat it elsewhere.

Whether you save or repay the mortgage, is really down to you, probably not a lot either way, you should build some emergency funds in savings before reducing your mortgage, because once paid back it's effectively gone for good, once you have done that, then if you can beat 2.5% net in savings then you might make a few pounds in additional interest, but probably not enough either way to worry about?

Latsie

Haven't really thought about the mortgage type. I too thought it makes sense to overpay now as much as possible, but there again if I can find an ISA with a better rate than 2.49% shouldn't I opt for that option instead?

dimbo61

You should get 3% tax free from a cash ISA for yourself and your OH !
Then overpay the mortgage
What others are saying is that you need a good cash reserve to pay for all the costs of moving such as fees, searches, surveys, legals etc without adding them onto the mortgage!
Now you may be able to transfer say £50,000 on the SVR of 2.5% and borrow the rest at 4% but if you have paid down the mortgage to say £40,000 then you will need to borrow the rest at a higher rate ( BUT you will have more equity so need to borrow less!!)
Upto you but I would be very happy to have upto £16K in savings