80% ltv

FIRSTTIMER

Hi,

I am still really wondering what to do, need to finalise my remortgage and undecided what to apply for?

Best 80% 2 Yr Fixed on 145k is around the 1.8% Mark. (Existing Lender is 1.74% £490 Fee)
Best 80% 5 Yr Fixed on 145k is around the 2% mark (I would go with Metro on their 2.04/09% rates). The difference in monthly amount ranges from £10-£20.

A lot of friends advice is that I should fix for the 5 yr as the rates will not be around 2% in a couple of years and forget the fact I may move or rent the property out as the rate is what's important. I do feel I could move in say 3 years time - this was my first property and I will probably be able to get double my mortgage amount if rented out (but again advice has been well rent it out then if needs must OR port the mortgage as you have a good job and will more than likely be able to midway through the fixed deal)

Are they right?

foxy-stoat

I wouldnt fix it for 5 years if I am thinking about moving in 3 years time.....I would think a little bit more if you want to be a landlord.

FIRSTTIMER

Good Point - But what about porting? Should I just take the risk with 2 year fix and hope for the best ha!

foxy-stoat

FIRSTTIMER wrote: »

Good Point - But what about porting? Should I just take the risk with 2 year fix and hope for the best ha!

Up to you - ask the lender if you can port ( same value ) if you wanted to borrow more in the future than nothing is guaranteed.

I have always had 2 year fixes and worked for me - you either fix for 5 and factor in the ERC or fix for 2 and hope the rates dont go up too much, which they probably wont for a while.

nicholbb

Below sounds really negative but just a heads up to consider.


The mortgage company doesn't have to agree you to porting (I did with a bit of hassle but nothing major) but how bad would it be to be there for an extra 2 years?



Permission with renting out your place is required, I hto get letters proving income and show how I could afford a new place to live.


You may face a charge (I'd face 0.5% mortgage fee ). Wouldn't you also be facing 6% stamp duty for second place?


What you are asking is not bad or unusual, just make sure you make choices knowing all the angles.

getmore4less

FIRSTTIMER wrote: »

Hi,

I am still really wondering what to do, need to finalise my remortgage and undecided what to apply for?

Best 80% 2 Yr Fixed on 145k is around the 1.8% Mark. (Existing Lender is 1.74% £490 Fee)
Best 80% 5 Yr Fixed on 145k is around the 2% mark (I would go with Metro on their 2.04/09% rates). The difference in monthly amount ranges from £10-£20.

A lot of friends advice is that I should fix for the 5 yr as the rates will not be around 2% in a couple of years and forget the fact I may move or rent the property out as the rate is what's important. I do feel I could move in say 3 years time - this was my first property and I will probably be able to get double my mortgage amount if rented out (but again advice has been well rent it out then if needs must OR port the mortgage as you have a good job and will more than likely be able to midway through the fixed deal)

Are they right?

What evidence do they have to back that up?
(my guess is none)

you are light on details like term, payments,lender and fees but lets do some numbers anyway

Looking at your two rates.(guess term of 25years, fees the same & £610pm) and what's left in 2years & 4 years

£145k 1.74% £610 £135,244 £125,143
£145k 2.04% £610 £136,103 £126,836

now the rate needed for your 2nd 2y to be no worse than the 5 year
£135,244 2.37% £610 £126,824

That means you have (2.37-1.74) 0.63% rate protection build in with the 2y that is 2 standard rises.
(if the fees to move to another lender are higher than £499 then that's even more protection against rises sticking with the current lender.

At 2 year your 80% LTV could now be under 75%(£136k) depends if the lender has a rate break at that point.

Is renting really an option?
Will you have the deposit for the next one and enough to cover the extra SDLT?

Even at rent of double the mortgage how many years renting to cover the extra costs, have your friends worked that out for you?

porting may be more realistic option but gain if you can't what are the exit fees going to be?

Metro in y3 is 3% lets say you have made generous overpayments(20% allowed ) so you only owe £100k thats still £3k.

How long would that £3k cover the mortgage on SVR after 2 years given you also have a £850 head start on the 5 year at Y2.


Does your cuurent lender have a 3y option?