Please help - should I remortgage?

littlepotato

Hi,

Feeling very confused about the mortgage world having had a baby 5 months ago and been poorly since. Would really appreciate some advice as am trying to sort out my finances.

I currently have a HSBC lifetime tracker mortgage, 1.99% (1.49% + base). Outstanding loan £525k, 50% LTV. My monthly payment is £2075, 28 years term remaining. It's a totally flexible mortgage - unlimited overpayments, etc.

From my search on this website it looks like there are now mortgage products with rates as low as 1.18%, which would bring down my monthly payments considerably. However they seem to come with hefty arrangement/booking fees (thousands of pounds). So how do I figure out what's best? Is the monthly payment the only thing I should be looking at ? The APRs are much higher than my current mortgage but is this irrelevant if I will be switching again in say 2 years (this seems to be the most common lock-in period for these products?)

Also should I be looking to fix, or should I stick to variable? And for variable, would, say, a 1.1% variable rate mortgage that 'locks you in' for a period of time (e.g. reverts to SVR after 2 years) be better than a lifetime tracker?

I have no idea how to work out what's best! Thanks in advance for any advice or suggestions on helpful websites.

Thrugelmir

Currently you are on a lifetime tracker. I've stressed lifetime as you've 28 years to go yet. So you need to need to bare in mind before chasing rates.

Consider the costs of remortgaging to a different lender i.e. product fees, valuation fees , legal fees and mortgage redemption fees.

What's the follow on interest rate after the initial period? Will you incur yet more costs to remortgage again.

Variable, fixed etc is very much a personal choice. How concerned are you with rising interest rates in the future? Lenders assess affordability at 7.5% now. As at some point the tide will turn and rates will normalise. Though if and when could be decades if we follow Japan's example.

If rising interest rates are a concern then reducing the debt owed. Is the most obvious of way of addressing the situation.

Where have you seen a rate of 1.18% advertised?

littlepotato

I saw 1.18% being advertised on this website by just doing a search, e.g. Yorkshire BS, TSB Bank and Chelsea BS all have rates of 1.18%. Halifax has a rate of 1.24%. But they are all 2-yr trackers and there are set-up fees ranging from 1-2.5k. I am just confused whether a lower monthly payment means that overall the lower interest is still offsetting the costs of remortgaging...?

I am trying to overpay on my mortgage whenever I can, I agree reducing the debt owed is a priority. I do worry about interest rate rises, not right now but perhaps in say 3-5 years time. If I fix now, I would come out of the fix just as interest rates start to rise!

Are there any resources online that could help with calculating / comparing the total costs of remortgaging vs the savings on interest?

Thank you!