Mortgage Rate Ending - Refix or Offset?

Muzzza

Hi,

My mortgage product is about to end and in a bit of a pickle of what to do due to a few circumstances.

We currently owe £202k over another 22 years which is about to revert back to a SVR of 4.99%

We are about to receive a substantial inheritance (more than the mortgage) and are also looking to move in the next 6-9 months which confuses me on the re-fixing element - We will be upsizing in property there too.

I can refix for 2 years for 1.54% with Early Repayment charges of 2.5% for year 1 and overpayments of 10% allowed.

Or can look into a discount mortgage rate of 1.4% with early repayment of 1%

Or finally can offset and put the inheritance in an account and use that to drive down the amount owed.

Really not sure which is the best route to go, any advice/ideas would be welcome.

getmore4less

You don't say if the mortgage + cash is enough to buy the next place?

Something portable seems to be the first criteria to avoid any ERC.

Portable offset with a decent rate offset 100% as soon as the cash comes in(
DO NOT TELL THE LENDER YOU PLAN TO DO THIS.

Then once you buy the new place(assuming you are selling) port the same mortgage and top up with cash from the offset.
in very rough terms

£202k @ 4.99% is £10.1k
£202k @ 1.54% is £3.1k + £5k 2.5% ECR
£202k @ 1.4% is 2.8k + £2k 1% ERC

The 100% offset option saves around 2.8k in the short term if protable but may be a higher rate longer term.

if you are going to need a bigger mortgage you have more numbers to work on.

Muzzza

Thanks! That’s where I was thinking.

We probably wouldn’t have enough to be mortgage free on the next place. Likely would end up with a mortgage of around 2/300k ( planning for forever home for next one)

Was leaning towards offset now. Put all money in accounts for offset including inheritance when through, then start getting more equity back. Pay it down and change with little left or port it over

getmore4less

you don't need to be mortgage free just not bigger than the one you want to port.

The advantage of the offset at the higher level is it preserves cash for no cost unless you need it.

You will have over £400k to play with + any other cash you have

if you think you might need to top up the current mortgage then that needs to be factored in as well.

you might benefit from an experienced broker that if familiar with the lenders policies and rates for porting top ups.