Remortgaging amidst extension

hellomynameismatt

Hi,

Hoping someone with more remortgaging experience can help with the following:

Current situation (approx):
Outstanding loan: £263k
Value of house: £405k
LTV: 64%
Renewal due: May

We WERE going to renew onto a lower rate (with <65% LTV), with a 5yr fix at 2.37%, as we were looking for LT certainty through brexit...

BUT...

We decided to take an £84k additional loan for an extension and additional works (kitchen, bathroom, boiler), which takes the LTV up to 85%. So when we renew the main mortgage in May we won't be able to take advantage of lower interest rates that come with lower LTVs, because our house will still be valued at £405k.

However, come September (post extension) the value of the house will have increased enough to drop us back into <75% LTV rates, enabling access to 5yr fix @ 2.49%

So, come renewal time in May I’m stuck with the <85% LTV rates - so what do i do?

1. drop onto the SVR @4.99% for a few months and then renew (hoping rates don’t rise significantly)
2. Take a 5yr fix @ 2.73% and forget about it
3. Take 2 yr. fix @ 2.21% and hope brexit goes well/stuff doesn't hit the fan with interest rates
4. Take a 2yr fix @ 2.21% and pay £6.7k exit fee in September to renew
5. Other?

Or... is the differnce in rates negligable and potential savings fairly insignificant relative to the value of the house (e.g. less than £3k) and i won't be making massive differnce either way?

Thanks in advance,

Matt

P.s. we're with YBS, the rates are here if it helps?
ybs.co.uk/ pdf/ mortgages/product-additional-lending.pdf

Richard_Pia

You could take a tracker rate with no early repayment penalties in the short term, then remortgage onto long term fix once extension done.