Which remortgage rate makes sense?

amnblog

Barclays will waive the ERC if you want to switch to one of their fixed rates.

getmore4less

Also forgot that tracker was 2 years and the deals to compare against would be other 2y and a switch going to the 5.
with the same £527pm payment
2y fix
£130,000 1.88% £122,100
£130,849 1.23% £121,308
£131,249 1.18% £121,590
tracker also at 1y
£130,000 1.73% £121,714 : £125,893

the 5y after 2 and 5y
£130,849 1.99% £123,265 : £111,309

After y1/y2 catch a new 5y you add the fee £849(they are the best for this size of loan) and need a rate that can get to £111,309

Y1 +fee 4y
£126,742 2.067% £111,309
Y2 + fee 3y
£122,563 2.196% £111,308

if looking at the tracker to benefit from a lower rate with the option to jump you are trying to catch a rate rise on Barlcays 5y fixes of around 0.067% at y1 or best case if runs the full 2 years 0.197%

with the 2y fix(1.23% £849 fee) looking to go 5y the increase improves to 0.316% to break even by y5(2+3).

With a 2+5 over 5+x you have the 2y overhang to factor in, with all this short term fixing(5y is short term) any protection against rate rises is limited, the new rates catch you in the end(if they ever go up).

hindsight the best(in terms of lowering the debt) options for the last 10y or so has been lowest rate/fee combo you can find and pay like you took a higher rate.

As you can see above the difference at Y2 between the 2y and 5y is around £2k less debt.

Running the 2y + 2y you can take 1% rise in the first 2 years to be no worse of by Y4.

one other factor is the LTV, Barclays are 60% and 80% any chance you can get under 60% in a couple of years, the 60% 5y £849 fees is 1.7% adding another 0.3% to any increase to can take.

amnblog

The point is that if you are concerned about near future rates rises, but would like to benefit from a less expensive rate today, the opportunity is there.

The maths is all very nice but borrowers make decisions on feelings.

getmore4less

Their advisers should be quantifying the choices to put those feelings in context.

ie. For this case to get the benefit of the short term lower against a 5y fix you need to catch and fix before the rates go up by less than 0.2%, less than one base rate move.

amnblog

You can tell a borrower this option is mathematically preferable, or that option carries less risk.

You cannot control how they feel.