End of Fixed Rate Mortgage Product

platzki

Hi Forum,

Need your help.

Me and my partner had our mortgage fixed for 2 years @ 2.49% we decided to increase our repayments to £445.42 to reduce the time of repayments. At the end of this fixed period (which is 31/10/16) our proposed variable rate with Halifax is ought to go up to 3.74% and proposed rate for another 2 yrs fixed period is at 2.34%.

We find these rates astonishingly high especially that on MSE's mortgage info page HSBC offer 0.99% fixed for 2 yrs! However, when you want to change mortgage provider you have to incur fees and charges (in the case of HSBC just about £1649). We had a discussion with my partner and we think we might want to move in 2 yrs time also (means we have been in the current property for 9 yrs).

We are a bit puzzled if accepting new rate from Halifax is better decision and less hustle rather than changing banks, paying requested fees and fixing at the favourable rate with other banks? We owe £66000. We also want to increase our repayments to £500-£525 pm. Halifax estimated current value of our property at £149000.

WHAT TO DO?

Thank you for your interest and help!

P.S. This is my first post so I apologise if it is not detailed enough!

kingstreet

£1,649 fees on a £66k mortgage would be daft for a two year fixed. No way you would recover your costs on that size mortgage.

Look at remortgage options which are fee-free and compare them with the customer retention options from your current lender which are also fee-free.

If you think you might want to move, opt for a penalty-free tracker product with the fee-free remortgage option so you can go for a new product or lender when you move house.

Thrugelmir

Your mortgage balance is relatively small. So what you need to consider is the potential costs of moving. Mortgage redemption fee, legal fees, valuation fees and as you point out product fees. (Lenders charge high product fees as they are after people with large mortgage balances to transfer. Which then makes the fee proportionately smaller).

A 2.34% is competitive rate and you'd incur no costs. In fact you could use the money saved to reduce your mortgage balance further.

If you want to save money overpay the mortgage by whatever you can afford. As the saving will be in interest. This will in time build further equity in your existing property.

Dird

https://www.moneysavingexpert.com/mortgages/best-buys/

Sort by MSE Total Cost for 2 year fixed mortgages. "Progressive Building Society" are offering 1.89% for 2 years, total costs of £3090 per year.

You can also get a better rate than 1.89% saving your cash so no need to overpay the mortgage