Options after 2yr fixed mortgage

outkastchris

I bought my first house in 2010 for £197500
spent alot of money and effort doing it up now my 2yr deal ends in june I've have got a few options

started of with £148125 a 75%LTV
the final amount is £143752
Ive had the estate agent around to value my property at £235000
I like the way I have it and am planing to stay here for many years 10yrs +

Do I invest some of my savings into a new mortgage to bring the LTV down to 60% and get a rate around 2.64%?

Do I borrow extra money bringing the LTV back up to 70% and getting a rate around 3.24% / 3.34% and invest that money about £20000 into a 2 yrfixed rate bank account @ 3.8% ?

marathonic

Unless I'm mistaken, the bank won't accept an estate agents valuation - you'll have to use one from their panel (depending on bank). Therefore, you may need to stump up more than a few thousand to bring it down to 60% LTV.

At 2.64%, I assume you're talking about the HSBC 2 year fix product.


The Fixed v' Variable is a personal decision but, if I were in your position, I'd look at it like this:

• I have enough savings to bring my mortgage down to 60% which also means I have enough savings to cover interest rate rises over the next 2 years - in the highly unlikely event that they materialise
• The application fee for the 2-year fixed product is £1,999, or 1.4% of the mortgage outstanding.
• The 60% fee-free lifetime tracker has no product fee and no valuation fee. It's rate is 0.15% higher than the 2-year fix making a difference of £11 per month on the 2-year fixed product. The rate STAYS at 2.29% above the base rate for the entire mortgage term meaning you're unlikely to need to remortgage in 2 years time

Basically, with the product fee of 1.4% of the outstanding mortgage for the fixed product and, taking into consideration the 0.15% higher rate of the tracker, you'd need rates to go up by an average of 1.1% over the two years of the fix to make fixed worthwhile.

Rates are unlikely to go up at all but, if they stayed as they are now for the first year, they'd have to jump by 2.2% at the start of year 2 to make the fixed rate a better choice.

Personally, I think it's a no brainer - go with the lifetime tracker

Thrugelmir

marathonic wrote: »

Unless I'm mistaken, the bank won't accept an estate agents valuation

The bank will appoint its own independent valuer.

getmore4less

Whats your follow on rate on the current deal.

dimbo61

In 2 years of paying the mortgage you have paid off less than £5K ?
So you want another 2 year deal ! and then pay remortgage fees again
Why not think long term and look at the 5 year fixes and offset mortgages
Only my views Good Luck