Getting ready for end of a 2 year fix

mack83

Hi All,

My wife and I signed a 3.99% 2 year fix with the Woolwich (Barclays) for our first flat.
It is still actually one year until the end of the fixed term, but I want to set us up to benefit from a better rate after the fix ends. (I'm conscious this may not be the best rate in the market, even for first time buyers)
~ My credit rating is now 'excellent' on Equifax (thanks to this forum!)
~ We are already making a modest over-payment every month on the mortgage.
~ We have a share of freehold, with leasehold. We do have approval to extend the lease.
~ We have made improvements to the property (double glazing, wood floors) which would support the value. It looks to have maintained value according to Zoopla.
~ The early repayment fee ends after the 2 year fix. So looks very reasonable.
~The original LTV was 95%, but we are over-paying monthly.

Any thing we should be thinking about in advance, to get a better rate after the fix ends?
Is it feasible to get a better deal than 3.99% at this early stage?

Thank you

mack83

If we saved and paid a lump sum, or more aggressively over paid to take us from approx 93% (at end of fix)... and took it down to 90% LTV
Could this be the best way to enable a better rate? Looking at re-mortgage comparison, that appears to be a huge difference to about 2%? That's close to £200-250 a month saving!

SavingSteve

Lower LTV would definitely help. They generally work in the following steps:

95%
90%
85%
75%
65%
50%

(I say generally, some lenders use different cut-offs). The rates dip as soon as you're over each of those thresholds.

What has happened to the price since purchased? You may find that if the prices have increased you may already have popped over into the <90% territory.

AnotherJoe

mack83 wrote: »

Hi All,

My wife and I signed a 3.99% 2 year fix with the Woolwich (Barclays) for our first flat.
It is still actually one year until the end of the fixed term, but I want to set us up to benefit from a better rate after the fix ends. (I'm conscious this may not be the best rate in the market, even for first time buyers)
~ My credit rating is now 'excellent' on Equifax (thanks to this forum!) irrelevant
~ We are already making a modest over-payment every month on the mortgage. Excellent
~ We have a share of freehold, with leasehold. We do have approval to extend the lease.
~ We have made improvements to the property (double glazing, wood floors) which would support the value. Irrelevant for mortage purposes It looks to have maintained value according to Zoopla. Utterly irrelevant

~ The early repayment fee ends after the 2 year fix. So looks very reasonable.
~The original LTV was 95%, but we are over-paying monthly. You could be at 90% now hopefully

Any thing we should be thinking about in advance, to get a better rate after the fix ends?
Is it feasible to get a better deal than 3.99% at this early stage?

Thank you

I suspect the ERC will negate any change at this point, just keep,overpaying.

getmore4less

Getting ready for end of a 2 year fix

It is still actually one year until the end of the fixed term

keep an eye on retention deals, value and overpayments for another 6 months.

You could look at what rate you need to make a remortgage work now.
erc and fees may make that an unlikely option if you don't know how to do that provide the details of the mortgage you have and someone may help.

Thrugelmir

12 months is a long time. With an interest rate of 3.99%, overpaying by what ever you are able to is most likely the best plan. Relying on interest rates remaining low for decades isn't a good repayment plan.

class2ldn

Sorry to hijack but we are in a similar position, currently on 4.09% and we have a year from October. Our early repayment charge is 2% so around 4500 which means it would have to be quite a low percentage to change now. Definitely worth looking at though and there is a calculator on this website somewhere to see what rate you need to get to make it work.
Any ideas how accurate zoopla is with house valuations?