Sensible to switch away from fixed early, for a staff variable rate?

Glastoun

Current mortgage is around £116000, just coming to the end of the first year of a 3-year fix at 4.9%, 19 years remaining overall. Monthly repayments are £759. House value is £150k, credit rating is good. Overpayments are limited to 10% per year, and the ERC for leaving in year 2 is 2% i.e. £2100ish.

We can pump some extra money into a remortgage, switching to a 15-year £95000 staff mortgage at 2.24%, linked to base rate - so if base rate goes to 1%, the mortgage goes to 2.74%. Monthly repayments would be £621.

Is this a sensible move at this point? The reduced interest means we would make back the £2100 ERC within 7 months, but would we regret it when interest rates start climbing up?

Is this a better deal than I would get on the open market? We would want to remortgage in 2 years time anyway, so who knows what rates (variable or fixed) will be around then.

getmore4less

Whats the followon rate on the current deal?

How does the staff deal change if you lose your job?

can you get a longer higher staff deal and overpay without penalty

Glastoun

Think the follow-on rate is SVR 5.5%, but I would never go onto this, as there would likely be better deals in 2 years time by remortgaging.

I'm guessing that the staff deal would end if I lost my job, haven't asked about this. It's a fairly stable job though, I'm more likely to walk than be pushed.

The staff deal is fully offset, so I guess I could set it to 30 years for the minimum monthly payment, and overpay, or keep savings in the linked account to offset it as much as possible.

But, I plugged the figures into a mortgage finder website, and it came up with Coventry Building Society at base plus 1.49% for two years (so 1.99%), which is better than the staff deal, so I'll maybe shop around anyway if moving is a good idea.

getmore4less

Don't forget to factor in the tax on staff mortgage a lot got caught out by this when rates dropped faster than the official rate.