Advice sought on remortgage

moodyman

Hello.

With TSB. Five year fixed rate of 6.69% coming to an end on 31/8. The rate it will revert to will be 2.50% automatically. There are two offers available:

2 Year Fixed
2.97% then 3.99% HVR 3% until 31/10/2015,
then 1% until 31/10/2016

4 Year Fixed
3.59% then 3.99% HVR 4% until 31/10/2015, then 3% until 31/10/2017, then 1.25% until 31/10/2018

I know this is decision cannot be made for us but our situation is that we will be selling and I worry that if we go on a fixed term we will not have the benefit of offers from other banks as we'll be locked in.

Is it best to just let the mortgage revert to the 2.50%, that way we are not locked in?

I am a complete novice when it comes to mortgages so I thank you for your patience with me!

Any advice welcome.

Twiglet21

Although the economy appears to be on its way up I doubt that interest rates will rise any time soon. If I were in your position I would allow my mortgage to reverts to the base rate as it is probably the lower option if it is between that or a new fixed rate. You will also avoid another product fee. If interest rates are predicted to go at you could always take out a fixed rate at that time but until then take advantage of the base rate. There is also no point taking out a fixed rate if you are intending to sell up, like you say you will only miss out on the advantages as they come later in the term.

moodyman

Thank you very much for the quick reply.

I think what you are saying makes perfect sense. Good to get confirmation of my own thinking.

Thanks again!

callmechar

According to pretty much every news outlet - interest rates will rise. Because of that, as soon as my fixed rate ends (March next year) I am going to get another fixed deal

Twiglet21

No worries. As the last poster says interest rates may go up which could happen as the housing market is no more buoyant, though I still think this is some time off. It is all personal speculation as with everything in finances. My advice to you would be to find a good financial advisor they do not charge as the banks pay their fees and you will be surprised at the savings you can make by taking their advice. I did this recently and was quite taken aback at their knowledge and ability to find me a better deal even if it is something as simple as the fact that they thought of something that I didn't. Good luck

Yorkie1

If you are planning on selling then a fix can be risky - if you sell during the fix, you will be eligible to repay the ERC either if you switch lenders, or if you apply to port your existing mortgage and do not pass the then criteria.

tigsly

I know intrest rates are bound to rise.. but surely fixing at a higher rate - than the variable offered makes no sense.. when you come out of the fix in 2 years - I dont think you would get a cheaper one..

Or am I missing something?

dimbo61

After 5 years of paying 6.69% I would be out dancing in the street at the end of August :-)
Drop onto the SVR of 2.5% but ask the TSB to keep your payment static ( IE pay the same mortgage payment each month that you have for the last 5years)
If the interest rate does go up it makes no difference to you as you are already overpaying !
Build up emergency savings to pay for fees, searches, legals, survey etc
Do not take a fix if you plan on moving in the next two/three years.
Your new mortgage rate is a BOE tracker at 2% above BOE and you will never see this again so hang on to it if you can