Ideas for long-term rate security with option for sideways move?

redonion

I want to say up front that I don't want to confine this thread to 10 year fixed rate mortgages in case there are more unusual products / schemes / wangles that I haven't considered yet. OK, that said...

I'm a FTB buying a flat in London (probably 75% LTV, 145k loan) and I'm very attracted by the idea of a 10 year fixed rate combined with overpaying. Particularly so right now because those fixes are cheap now, and while I think rates are likely to stay low for a big part of the period of a 5 year fix, the 5 years after that are much more uncertain. That has a big effect on interest rate risk and on how fast I can pay off the mortgage!

Sadly, I've just learned about the catch (for me): that a move before the end of the fix period counts as "early repayment".

I really don't expect to move "up" or "down" in price by much. I DO expect that I might want to move after 5 years to a different but similar area of London, to follow work, to a property that is very similar in price (and similar in risk to the lender - i.e. not the 15th floor of a tower block or a flat above a chippy). So my loan value is unlikely to change by very much when I move.

In my situation, is there any way out of that dilemma? Can I insulate myself against interest rate changes over roughly the 2018-2023 period and retain any confidence (or even expectation) that moving before the end of the fix could be done without a hefty ERC?

To me, "hefty ERC" means perhaps 5k 5 years in (am I right that's typical for my loan value? I find the terms very hard to interpret). I'm still thinking it may be worth it even so... On the other hand since I'm interested in security I suppose the other important possibility for me is if I'm not earning as much in 5 years and need to move somewhere cheaper. Agh, too many possibilities!

Edited to add: if I were to move I'm more likely to move down a little in price than up, because I'm going to have more space than I need in the flat I've offered on, and not expecting to need more.

kingstreet

Get a product you can "port" to a new mortgage with the same lender when you move property and you avoid the early repayment penalty as long as your new mortgage is the same, or higher. In the latter case, you take the extra money on one of the lender's current products at the time.

redonion

kingstreet wrote: »

Get a product you can "port" to a new mortgage with the same lender when you move property and you avoid the early repayment penalty as long as your new mortgage is the same, or higher. In the latter case, you take the extra money on one of the lender's current products at the time.

Ah, I see, thanks. I read the MSE guide some time ago but had forgotten about this.

This may be better in a new thread, but: which of the 10 year fix lenders are known for saying yes to porting requests?

kingstreet

No idea.

You'd need to check the terms of the individual product(s) under consideration.

Thrugelmir

redonion wrote: »

but: which of the 10 year fix lenders are known for saying yes to porting requests?

That would require a crystal ball. As 10 years is a long time ahead. Policy could change numerous times in that period.