Remortgage time again...

Maelwys

So my current two-year fixed period deal with Barclays comes to an end in September and I'm starting to think about longer-term. (I had an initial Capital Repayment 2-year fixed deal with Barclays, then moved packages to another 2-year fixed, so the mortgage is currently 4 years old with 21 years left to run).

Once the fixed period runs out in September, I'll be free to move the mortgage pretty much anywhere. So I've been weighing up my options and trying to see what the best balancing act is.

Which brings me to my query...

I have a Santander 123 account which is getting 2.4% (after tax) interest on my savings. Looking at my remortgage options I can see a Lifetime Tracker for 65% LTV available from First Direct which has an interest rate of Bank of England Base plus 1.29% (so currently 1.79%)

Currently my plan is to swap to the First Direct in September and just pay the standard amount each month whilst throwing any extra savings into my Santander 123 (at 2.4% interest) then wait until the bank of England rate rises and pushes the tracker above 2.4% interest... at which point I'll dump all my surplus savings into the mortgage to bring the owed capital down and start overpaying the mortgage as much as I can instead of keeping extra savings in the Santander.

I've been staying away from "Ownbrand" variable rate trackers since I've heard there's the potential for the lender to suddenly jack their rate sky-high with little/no reason; but I'm thinking that a tracker based on the Bank of England rate ought to be a bit more stable.

Is this plan a no-brainer, or am I missing something?

(I'll keep a sensible savings buffer regardless, and I currently have enough of my wages left every month to be able to pay double what the initial standard payment would be, so there ought to be enough leeway here for me to cope with a gradual interest rate rise especially if I can pay some of the capital off to reduce the amount that's actually owed...)

I could always go with another 2-year fixed deal and save a nominal amount per month, but the arrangement fee would gobble that up. And spending money on arrangement fees and revaluation fees every few years just to keep swapping and swapping strikes me as pretty pointless...

Any thoughts...?

Mrs_Rachel_Trelfa

Suggestion, if you have the santander 123 current account, are there any deals with them as you would then get cash back on your mortgage repayments in addition to your billa (assuming you already have that setbup?)

Maelwys

Mrs_Rachel_Trelfa wrote: »

Suggestion, if you have the santander 123 current account, are there any deals with them as you would then get cash back on your mortgage repayments in addition to your billa (assuming you already have that setbup?)

Good catch. I'd looked into that a few weeks back actually, but have just double-checked to make sure nothing has changed since then...

Yup, there are deals (both Tracker and Fixed) available to me with Santander, but sadly they're all at a much higher interest rate than other options (Bank of England Base plus 1.89% - and they don't offer any reductions past 70% LTV) so even with the 1% cashback I'd get on mortgage repayments it'd still cost me a fair bit more per month...

...maybe if the cashback on mortgage payments was 10% per month instead of 1%...

Mrs_Rachel_Trelfa

Maelwys wrote: »

...maybe if the cashback on mortgage payments was 10% per month instead of 1%...

Hehe if only.

Ah well, just a thought