First time remortgage, need some advise...

knight2135

Hi folks,

Im looking to see what other poeple would advise in my position..

Couple of details up front
Joint salary £47k pa, outstanding owed £128500,no outstanding loans,no overdrafts,no car finance, no bad history.

Im currently at the end of my first 2 year fixed term mortgage. I decided to take Interest only with the view to change at this point two years ago just to keep payments down as a first time buyer. Now two years on the rates have increased pushing my repayments up £200 a month. I would like to get off interest only but need some advise.
Ive seen a broker and he said to keep paying interest only for 2 more years to see what the market is doing. My worry is that if rates dont fall ill be 4 years into my mortgage and paid nothing off the vaule of my house. Also the arrangment fee to remortage is £1000 which is added to the term so infact the loan amount is rising in the wrong direction. Full repayment on a fixed term is around £900 a month which would leave me tight each month. Ive looked at a 50/50 split with half on interest only and half on repayment but over the 2 year fixed term ill only end up paying £1400 off the mortgage, with a £1000 arrangement fee hardy seems worth it.
I want to try and avoild high arrangment fees as i dont want the amount I owe £128500 to increase anymore but really stuck to know what to do for the best.

Does anyone have any advise ?

herbiesjp

Has your adviser shown you other deals i.e. higher interest rates with lower arrangement fees

Have they explained that you could take out an interest only mortgage, but make your own voluntary capital overpayments each month or on an ad hoc basis, so that you could reduce your mortgage amount like a repayment mortgage, but with you being in control of the overpayments.

This would need you to be disciplined to maintain the overpayments, or at least make the overpayments when possible, otherwise as you rightly say, you will be 4 years down the line with the original mortgage balance to pay off.

knight2135

No he hasent, we only looked at Interest only - 50/50 - and capital and repayment.

The rate of interest only is 5.79 which is £630 a month, I could over pay around £200 a month but that take me up to £830. I might as well take out capital and repayment.

Would you consider a tracker in my position? I know the rates are high now but I would benifit IF the cost of borrowing were to decrease over the next 2 years. My current lender will offer capital and repayment, fixed at 6.09% for 2 years £872 a month with a £599 setup fee. Would a tracker be much more a month ? or is it too much of a gamble to assume the rates will drop the same way they have risen over the last 2 years ?

herbiesjp

You could look at maybe setting up a mortgage with two different rates say 50% on a fixed rate and 50% on a tracker rate.

This way you are not placing all your eggs in one basket