Coin toss time.....remortgage

TreehornsShrinking

I need to decide on a remortgage package. After doing all my research, and asking the opinions of brokers and others in the industry, I put myself at the mercy of your ridicule to help flip this coin for me.

It's down to a choice of 2 repayment mortgages, and comes down to betting on interest rates - opinion is, so far, pretty much 50:50 on at what point they will change, and by how much in the next 2 years (the lock in period).

Halifax : 0.59% + Base Tracker for 2 years (approx £1200 fees)
Yorkshire : 1.18% Fixed for 2 years (approx £2200 fees)

We're fortunate to have a low mortgage on the property, and the difference in fees isn't a deal breaker for me. Initial payments for both are acceptable, and lower than my current payments.

The challenge being, if rates go up to say 2.5% by end 2017, having climbed slowly during 2016 (as predicted by a couple of Finance pages) then with the Tracker I'm worse off by several hundred £/month. However, I can find just as many articles saying they'll stay low through 2016/7

Fixed gives me planned finances, but with the higher fee and I may end up being out of pocket over the 2 years based on the Tracker and I may end up kicking myself.

Anyone out there got a crystal ball handy? Mine seems to be on the blink.

No other financial concerns that need to be taken into consideration, it's a straight fight.

betmunch

you have a low mortgage and are looking at the deals with high fees?


As a general rule its the low fees deals that works out best.

Thrugelmir

What are the follow on SVR rates. Switching lender yet again will mount up in cost.

TreehornsShrinking

0.59% + Base goes to SVR of 3.99%
1.18% Fixed goes to SVR of 4.99%

However, if we accept I would remortgage again after the 2 year lockin is up, it still comes back to the core question : what do people think about rates over the next 2 years?

Thrugelmir

Option 2 incurs you £1k now and potentially another £1k in 2 years time.

You haven't said what you will be borrowing. So how much would base rate have to rise for the tracker (option 1) to cost you money.

Interest rates appear more than likely to rise now. So maybe worth considering a 5 year fix if you've no intention of moving. As spreads the costs out over a longer period.

Does you figure for fees (costs) include anything that you will incur in remortgaging?

TrickyDicky101

How much are you borrowing? Impossible to give a meaningful response without this information. Also, over what term?

Unless all you want to ask is will rates rise in the next 2 years? I guess 'yes'.

TreehornsShrinking

Interesting article on latest interest rate predictions from Oxlade in the Telegraph - I can't post the link as I'm a new user, but it's under HOME»FINANCE»PERSONAL FINANCE»INTEREST RATES and was updated on the 30th April

Fixing @ 1.99% for 5 years starts to look a better gamble

audigex

The assumption is that rates will rise in the next 2 years, but since nobody can predict the result tomorrow, we can't say for sure.

Most analysts seem to be expecting a rate rise of at least 0.5% in the next 12 months, and of somewhere between 1% and 4% in the next 5 years... but we don't really know.