Remortgage - Length of Fix and Deal Offer - Opinions please?

mae

Hi

I was hoping for input/opinions from other MSE members if you have time please.

We are remortgaging for an extension.
We have excellent credit rating so no issues there.

Currently owe £85,000 and house worth approx £260,000

Want to remortgage to £145,000 as extension quotes are 60k

At the moment we are on the standard base rate with Nationwide on interest only. I currently pay £457 per month (some is overpayment).

So I approached London & Country as advised on here. And they have come back with a deal:

HSBC 1.99% for FIXED for 5 years with no fees at all. This will be a repayment mortgage over 18 years.
Monthly cost £800.

Obviously there are better deals if we just fix for 2 years but then they have fees and I'm wondering where the rates will be in 2 years time (as is everyone I know haha).

Any thoughts opinions? I would be very grateful.

AnotherJoe

What would Nationwide offer you?

Thrugelmir

mae wrote: »

HSBC 1.99% for FIXED for 5 years with no fees at all. This will be a repayment mortgage over 18 years.
Monthly cost £800.

How much lower do you expect rates to go?

What 2 year rates are you using as a comparison.

mae

HSBC are offering also a 28 month fixed
RATE
0.99%
For 28 months, then SVR for 15 years and 8 months currently 3.69%
SET-UP FEES:
£1,756
MONTHLY PAYMENT
£733 For 28 months

Which is obviously excellent but I am worried that when the deal ends the interest rates may have gone very high and it will be difficult to get another deal?

mae

AnotherJoe wrote: »

What would Nationwide offer you?

They are doing a 2 year fixed 1.34 % and £999 fees OR a 5 year fixed 1.99% with £999 fees

mae

Has anyone any thoughts on 5 years fixes, is it too long?

Rachel_Pierson

mae wrote: »

Has anyone any thoughts on 5 years fixes, is it too long?

My tuppence worth: I'm remortgaging at the moment, and initially opted for 2 years fixed instead of 5. The difference between the two was about £21 per month. No fees in either. So, assuming I could get two further two-year fixes at the same rate, I'd have saved (21x60) = 1260 over five years.

But then I thought all mortgage lenders would need do in the next two years is withdraw the "no fees" deals, and I'd probably pay that £1260 I'd saved as a fee. (Fees are presently about £1000 - £1500 for most mortgages.) So, if I paid two lots of those fees by remortgaging at year 2 and 4 that would dwarf any saving in rate. I therefore changed my mind and went for 5 years instead.

My belief is that rates will be as low in two years time as they are now with uncertainty about Brexit prevailing. I think they'll rise after that, as I don't think Brexit will have as adverse an impact on the UK economy as most observers seem to expect. I think the law of unintented consequences will come in to play, and British companies will start sourcing more of their supplies from the UK where they can, where supply is cheaper. This keeps more money inside the UK economy. But, hey, I've been wrong before, and could be again.

At the moment, you can get a 5 year fix for about 2.18% with no fees. And some places like Santander are even lower than that when you take into account their current account cashback offers (a Santander 1-2-3 account gives you 2% of your monthly mortgage payments back.) And if you want, there are slightly more expensive deals out there like Yorkshire Building Society and The Coventry PLC that allow you to offset if you want. (Rate is about 2.25% for five years, and about 1.64% for two years, with fees of about £1000.) So, Offsets are a way of having a Rainy Day Fund plus lowering your mortgage payments whilst you don't use it. They can therefore be a good alternative option if you're considering overpaying, but want to plan for contingencies like unexpected costs too.

Bottom line, in my opinion it's about the best time ever to fix for 5 years. How much lower can interest rates go? Even if the BOE rate falls to 0%, I don't think mortgage lenders' rates will fall much if any from their present unprecedented low point. I don't think you'll save money by fixing for 5 years rather than 2. But it won't cost you much more over 5 years. And it safeguards against the unexpected, such as me being right about the economy and George Osborne et al being wrong. (Hey, it could happen! :rotfl:)

mae

Thank you Rachel that is helpful. I do think its a good deal 1.99% with no fees I think we will go for it. It is just feels strange for me psychologically feeling tied in for so long haha which I know is ridiculous as essentially I am tied to a mortgage for the next 18 years unless I overpay

Rachel_Pierson

mae wrote: »

Thank you Rachel that is helpful. I do think its a good deal 1.99% with no fees I think we will go for it. It is just feels strange for me psychologically feeling tied in for so long haha which I know is ridiculous as essentially I am tied to a mortgage for the next 18 years unless I overpay

Yes, I remember being nervous/scared when I took my first mortgage out 15 years ago. But in a few years, when you see how cheap your monthly cost for accommodation is compared to renting, plus you get to keep the house at the end, you'll be reassured you made the right decision. Good luck!

muhandis

So are you incurring no fees at all if you do decide to remortgage to the HSBC 5 year fix? No solicitor fee either?

Rachel_Pierson

muhandis wrote: »

So are you incurring no fees at all if you do decide to remortgage to the HSBC 5 year fix? No solicitor fee either?

I've had an offer this month from First Direct, that I put on hold to investigate other options. There were no fees of any kind in it, including solicitor/conveyancer fees. I think HSBC are the same, as they're the same banking group.

This is in comparison to other banks "no fee" deals, like Santander. Where I just found out today there is actually a £255 "closure fee", even though it's listed as "no fees" on all the comparison sites, and their own website.