Fixed rate coming to an end

adamcarvell

getmore4less wrote: »

still not said which is which.

With a 5 month gap what you could do is delay the first to change as late as possible and if Santander allow switching early do the second part as early as possible that will close the gap for next time.

Looking at Santander products
check what retention deals are available

looks like 2year fixes are something like 1.54% £999 fee and £1.89% £0 fee.

break even on those rates for 2y fix is around £143k(depend on term and payments)

Both your mortgage part are under that combined is over so there may be a benefit it combining.

For 5year 1.95% £999 fee and 2.19 £0 fee the breakeven is around £85k


with full details and the earliest you can switch products on a santander it will be possible to work out if sitting on SVR for a few months is worth it.

the retention deal ive been offered from santander is 2.29% five year fix no fee.

getmore4less

Chrisw2214 wrote: »

When you say which is which do you mean which rate goes with which part of the mortage? And what do you mean by breakeven sorry for asking so many questions

Rate and size of each bit.

The break even is the size of mortgage you need to recover the cost of the fee over the fixed period.

Chrisw2214

I have 125k on 2.99% that finishes in may 2019 and 44k at 3.99%that ends in September 2019.
That's great information thanks for your help makes it a bit clearer for me

enthusiasticsaver

It depends on the early redemption penalty as getmore4less says above. As the smaller loan finishes 6 months later it may be worth combining the 2 parts and paying the ERP on the £44k. Depends on the difference between the rate they offer you and the SVR you would go onto. Of course there is no guarantee rates won't increase between May and September so there is no certainty as to which is the better option to choose.

Chrisw2214

The early repayment charge is £2224 on the 44k. Of course none of us can tell what the rates won't do just trying to have a educated guess

enthusiasticsaver

That seems like a high ERP so I would not pay that. Might be worth waiting until February and seeing what the differential is between the rate they offer you on the £125k and the SVR at the time. If it is £133 per month that is obviously less than the ERP so you could wait until August. Your broker may be right though in that there is no benefit in combining if you already are on lowest LTV tranche even with the two parts combined. In which case fix the bigger loan in March and the smaller one when that finishes in September and keep them separate. Obviously that means staying with your existing provider though.

nicholbb

I started moving my mortgage 7 months before my fixed term ended and avoided the rate hike (I expected them to just up it).

Can you pay off 10% in each calendar year? If so try to do as much as possible this month, that would save you some ERC and change your figures.

Don't be close to the LTV % they reduce the property value quite often. Especially if you did your place up as this isn't reflected in their valuations.

nicholbb

I started moving my mortgage 7 months before my fixed term ended and avoided the rate hike (I expected them to just up it).

Can you pay off 10% in each calendar year? If so try to do as much as possible this month, that would save you some ERC and change your figures.

Don't be close to the LTV % they reduce the property value quite often. Especially if you did your place up as this isn't reflected in their valuations.

getmore4less

if you want to bypass the waffle go to the bottom.

Woops forgot to ask for your full term so will have to guess.

If £125k moves from 2.99% to 4% that will change the payment by around £60-£70 or £115-£140 against a 2% rate.

eg. over 20 years
£125k @ 2.00% £633pm
£125k @ 2.99% £693pm
£125k @ 4.00% £758pm

how did you get £133pm?
(NOTE: this does not tell you how much the real cost is for those 5 months)

for now I will guess it was against a 2% rate that makes the term around 28 years.

Chrisw2214 wrote: »

I have 125k on 2.99% that finishes in may 2019 and 44k at 3.99%that ends in September 2019.
That's great information thanks for your help makes it a bit clearer for me

I will do some calcs but it will depend on the real numbers at the time, rates might move your mortgages will be smaller etc.

Assumption
The gap is exactly multiple months(5).
SVR is 4%

Santander you can start the process 4 months before the date
What is the earliest you can make the switch?
well according to the product transfer info available to brokers this can happens as soon as the docs are processed?
perhaps one of them can confirm.


I suspect if you want to combine the parts to a single product transfer that may not be so simple and may need checks.

Another option might be to look at extra borrowing on the first part to secure the best rate(retaining LTV <60%) then use those funds to reduce the £44k as soon as the ERC is zero.

Current mortgage

£125k 2.99% May 2019
£44k 3.99% Sept 2019

I will use the current(13th Dec) 5y fix rates.
Can't find product transfer rates which may be different.

5y 1.95% £999 fee
5y 2.19% £0 fee

For the 5y fixes over 28 years at 5 years
£125k £500pm the fee option £370 cheaper
£44k £175pm no fee option £580 cheaper

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The very rough simple calc is to just look at the interest assuming no capital payments

By waiting the 5 months the £125k will cost an extra 2.05% or £1068.

You can then move the £44k onto the lower rate fee deal for no extra cost if you merge.

The saving is £44k @ 0.24% cheaper for 5 years or £528

Given those numbers I suspect the real calcs will still show the best option is get that £125k sorted ASAP and concentrate all overpayments on the £44k rather than take the hit on the £125k for 5 months.

if you think rates might go up then any delay hits that £125k one 0.25% rise will cost upto another £1500 over 5 years..

Chrisw2214

That is a lot to digest but I have read it all and appreciate all the effort you have put in to answer my question so thanks very much for that I shall see what deals I can get to fix that deal ASAP