Mortgage Deal Ending But Looking to Move Next Year

swcfc

Hi,

Just looking for some advice.

Currently on a Santander fixed rate deal which is due to end in February. We are hoping to move house next year so I'm trying to find out the best option we should take now.

We could re-mortgage with Santander, but then when we look to move we would likely have to renegotiate with only them for a new deal on the new house, as the exit fees would be too high to leave. Or we could go on to their variable rate when our current deal ends, which would allow us to be more flexible and look at the whole of the market for a new deal when we want to move, but the costs would be greater due to the high rate.

The other option I guess is to negotiate a new deal with another broker now which has very low exit costs, so when we look to move we can still look at the whole of the market without having to pay too much to leave our deal at that time.

Appreciate any advice anyone can give.

Thanks,

Mark.

[Deleted User]

Or a mortgage that you could potentially port.

chelseablue

I'd look at your mortgage documents and see what it says about porting.

We're in a fixed rate with Nationwide, but if we wanted to move we can port our mortgage to a different property

swcfc

Thanks for the replies.

If I port the mortgage to a new property, wouldn't I only be able to negotiate for the additional borrowing needed with the same broker, which means it becomes quite restrictive?

MortgageMamma

Porting is a bit of a chance really. You can only port if you meet affordability criteria with your existing lender for the new loan amount and also the property itself has to be something the lender would be willing to accept as security. Added to this, the lender criteria at the point of porting is what applies, not the criteria of the lender when you switch to your new deal. Lender criteria is subject to change.

Many lenders can be picky about flats, houses near commercial premises, the length of the lease if its not a freehold, certain types of construction are not view favourably etc etc.

If you do switch and port, you could end up with two different accounts with the lender with different end dates on the product, so could end up on SVR anyhow.

I would say look for a tracker with no early repayment charges. They are thin on the ground if there are any about at all. There won't be a fixed rate without early repayment charges.

Do a calculation to see how much you would benefit from going on a new deal with early repayment charges (how much you save per month + ERC's factored in), and compare this with the savings of going onto a deal with no early repayment charges. Then compare those figures with the increase in mortgage payments due to being on standard variable rate.

Its all a bit of guesswork really as you don't know how long your house will be on the market for, and when you do find a home for yourselves how long it will take to complete the transaction.

LRmortgage

Tracker with no ERC is what you need in the short term. Have a look at what options Santander are offering you as a product transfer.
I did one with Santander last month for a client so may be an option for you if available.
Then when you do sell and buy you will have the flexibility of picking other lenders if applicable and not paying an ERC to pay off the Santander mortgage.

SouthLondonUser

MortgageMamma wrote: »

There won't be a fixed rate without early repayment charges.

Do a calculation to see how much you would benefit from going on a new deal with early repayment charges (how much you save per month + ERC's factored in), and compare this with the savings of going onto a deal with no early repayment charges. Then compare those figures with the increase in mortgage payments due to being on standard variable rate.

Actually, there are some mortgages which are fixed-rate yet do not charge an early repayment penalty. They are few and tend not to offer the best rates, but some do exist. You can find some of them clicking the “no early repayment charge” box on the search function here: https://www.moneysavingexpert.com/mortgages/best-buys/

Also, some lenders refund you the early repayment penalty if you take out anther mortgage with them within a few months; eg at one point this was 6 months for the Yorkshire Building Society, not sure now.

Yes, the OP needs to compare costs. But, when calculating the comparison, he should remember that capital repayments are not a “cost” because that’s money he’ll be paying to himself; of course he must be able to afford the mortgage payments, but the real cost is interest and fees, not principal.
The OP can use a spreadsheet or one of the many spreadsheet templates or online amortisation calculators to compare the costs of:

• The fixed-rate mortgages with the lowest interest rate but ERC
• The fixed-rate mortgages with no ERC
• The variable-rate mortgages with no ERC (but this means guessing where interest rates will be)

For example, let’s say the mortgage is £200k and the OP keeps it for 12 months.

• Newcastle building society has a fixed-rate mortgage at 1.89%, with £1,289 of upfront fees but no ERC. After 12 months, the cost will have been £3,725 of interest + £ 1,289 fees = £5,014 in total.
  
• TSB charges 1.43% (2-year fix) with £995 of fees and 1% ERC if you repay after the 12th month. So the cost is £2,816 interest + £995 fees + £2,000 ERC = £5,811

Note I have chosen these two mortgages as they were the first I found, not because I am in any way recommending them over others.

kingstreet

chelseablue wrote: »

I'd look at your mortgage documents and see what it says about porting.

We're in a fixed rate with Nationwide, but if we wanted to move we can port our mortgage to a different property

No you may be able to port your product to a new mortgage, if you continue to meet affordability, status and criteria and so does your new property.

It's the terms that are portable. the actual mortgage has to be released by your solicitor as a result of the loan being repaid from the sale proceeds.

kingstreet

Another vote here for a fee-free tracker product with no ERCs and if you can remortgage and get your legal fees paid for you, so much the better.