Remortgage advice

Pablosammy

We're moving in approximately 6 months - relocating due to work, so there is no negotiation here. We're selling our current house, and hopefully buying in our new location.

Our mortgage has 23 years remaining, and we are coming to the end of our fixed rate (1.74%) period and don't want to drop onto SVR at 4.74%.

My worry is that we won't be able to find a property immediately in our new location, and as such will need to redeem the mortgage early with the ridiculous costs that this will incur (our balance is over £200k) if we were on a fixed rate product. Hence I'm leaning towards a variable rate mortgage which has no early redemption fees.

My thinking is to get on the lowest rate available to us through our provider (2 year fix at 1.09% above base rate) We'll incur a £999 fee, but will be able to port it if we find a new house, and can exit it if we don't. For comparison, the follow-on variable rate product with no fee would cost us £230 more per month in interest, so we'd recoup the £999 within 5 months. SVR doesn't bear thinking about!

Any holes in this plan?

amnblog

The big 'hole' is that porting is a product feature, it is not a guarantee that you will be offered lending on the new property. No offer, no port.

Does the lender not have a new rate without an early redemption penalty.

Pablosammy

amnblog wrote: »

The big 'hole' is that porting is a product feature, it is not a guarantee that you will be offered lending on the new property. No offer, no port.

Does the lender not have a new rate without an early redemption penalty.

Cheers for the response.

In answer to your question, only on their variable rates - they couldn't offer a fixed-rate product with no early redemption. Ultimately, we need to continue financing this house, so it's either;

a) Do nothing and drop onto SVR (4.74%).
b) Get a new variable product and pay no fee (3.25% +0.5%, no exit fees).
c) Get a new variable product and pay a £999 fee (1.09% +0.5%, no exit fees).
d) Get a new fixed product, and risk large early termination fees (over £5k) if we can't or don't want to buy straight away in our new location.

Option (c) becomes the cheapest option after 4-5 months if I've done my maths right, and is the way I'm leaning.

kingstreet

Remortgage to a new lender onto a fee-free product with no penalties (such as a two year tracker) then you are free to do what you want when you need to...?

Pablosammy

kingstreet wrote: »

Remortgage to a new lender onto a fee-free product with no penalties (such as a two year tracker) then you are free to do what you want when you need to...?

I must admit, I'd wanted to stay with the same lender just to 'ease the passage', but I'll have a look around to see what else is out there. Cheers for the prompt.

kingstreet

From what you've said, you either have to stay on SVR, accept ERCs or pay a fee to stay with your existing lender.

I can think of a couple of remortgage options (as could any number of brokers) where none of the above will be necessary.

We're talking about top five high street, just in case you might want to stay with them for your move...

Pablosammy

kingstreet wrote: »

From what you've said, you either have to stay on SVR, accept ERCs or pay a fee to stay with your existing lender.

I can think of a couple of remortgage options (as could any number of brokers) where none of the above will be necessary.

We're talking about top five high street, just in case you might want to stay with them for your move...

Not quite - option (b) above has no fees and no early repayment charges, but the interest rate is a fair bit higher... higher enough that the £999 saving is wiped out within 5 months.

But yes, I will shop around!