Advice on remortgage with planned move in 2019

minimaddave

We're wondering if anyone would be able to advise on our current house situation:

We bought our house (as FTBs) in November 2016 for £255,000 on a 2 year fix (Nationwide 2.09%), with a £160,000 mortgage. We've been overpaying slightly, and reckon by the time our fix comes to an end in November 2018, we'll be down to about £145k.

Ordinarily, I'd shop around and try to find a good 5 (possible even 10) year fix to ride out any possible interest rate rises over the next couple of years. However, my wife and I are planning a house move (to a different city, to be closer to the in-laws) in approx. September of 2019 (looking for a house at approx. £350k). We're also planning to try for a baby in 2019, so its entirely possible that my wife will be on maternity leave when we come to move...

By Sep 2019, based on projected savings/overpayments, we think we'll need a mortgage of £205k to cover the new property. So should we go for a 5 year fix when we remortgage this year, then port this to the new house? Or should we go onto a tracker for ~10 months, and remortgage again when we come to move in Sep 2019? Would maternity leave affect a remortgage at this point?

I'm thinking that the 5yr fix/port option may work out cheaper, but do we run the risk of not being able to port the mortgage? The latter option (tracker until we move) may mean that we end up with a higher rate fix if interest rates rise between Nov 18 and Sep 19.

Any advice would be greatly appreciated!

minimaddave

Would be great if anyone could offer us some advice, or let me know what we should be factoring into our decision! Thanks

TamsinC

sorry I have no idea- but it does seem once a post has a reply others answer so hopefully this will help

User_310521

Hi, I am in a similar situation. I am going to renew my mortgage rate in July but will do so with a tracker that has a 2 year promotional period. Fixing might be a good option but the early repayment charges (ERC) are hefty and if, as you say, you can't port, or porting is not in your best interest, then you would have to repay and incur in the ERC. The tracker has very low ERC compared to the fixed rate, so I think it's a safer option should you have to repay, while you still save compared to your SVR. You can then fix in 2019 should you want to.

ACG

If you tie in to any deal then when the house move comes, you have the choice of 1 lender or early repayment charges.

You could sit on the SVR rate until you move, but you are then likely paying over the odds for the next 18 months or so.

I moved house last year but my deal came to an end around 6-7 months prior to me moving so I took out a tracker mortgage which was cheaper than an SVR but it also had no ERCs, so when the time came to move I could do so freely.

The choice is yours, it will depend on the rates/fees and whether or not it is worth the hassle of switching - ie if you are switching for the sake of £10 a month, it is probably not worth the hassle?

minimaddave

Thanks for your replies, KikeLondon and ACG. I agree that a tracker mortgage would keep some options open for when we move. I hadn't really thought of it as being limited to one provider, more that we'd be fixing in a good deal now and (hopefully) be able to take that with us when we relocate!

ACG

minimaddave wrote: »

Thanks for your replies, KikeLondon and ACG. I agree that a tracker mortgage would keep some options open for when we move. I hadn't really thought of it as being limited to one provider, more that we'd be fixing in a good deal now and (hopefully) be able to take that with us when we relocate!

That is called porting. If you want to port, you have to apply. If you no longer fit criteria (because your circumstances change or the lender changes criteria) or they do not like the property you want, you have the choice of missing out on the property or paying the ERCs.

That is the only issue if you tie in and want to move.

User_310521

As ACG says.... the porting is based on a completely new application for a mortgage of your new home.

Assuming they are happy to lend you in 2019 then you should be able to 1) port your amount lent and rate to the new mortgage and 2) borrow any extra amount needed on top of your exisiting with the same bank, not another bank. It thus limits you in terms of shopping around.

Also keep in mind that ideally you will have to sell your current property at the same that you buy the new one. Otherwise you may need to pay the ERC regardless.

minimaddave

Thanks again, both. Based on your advice, it seems that fixing this year may limit us somewhat when we come to move - I'm not sure whether my wife and I would want to run the risk of not being able to port, then having to pay an ERC...Definitely food for thought when we come to remortgage in a few months' time!