Ditch My Fix?

thematrix12

Hi all,

We are currently on Year 3 (soon to be Year 4 come September) of our 5 Year Fix with Nationwide at 2.64%.

We currently have £141k owing.

I've seen today that First Direct are offering mortgages of 5-Year Fix of 1.99% and 10-Year Fix of 2.39%.

We have no plans of moving anytime soon.

I am trying to work out if it would be a good idea to remortgage now. I will have a 2% ERC fee to pay come September (First Direct mortgages offer period is 6 months so could apply now and hold until September).

Currently we would have around £2700 ERC to pay. My calculations £897 per year saving on FD 5-Year Fix and £345 per year saving on FD 10-Year Fix (appreciate these will go down as mortgage lowers). I am pretty confident we would be accepted by FD (we have a LTV of around 65% and joint income of around £56k).

No one knows what Brexit will do in the short-term or long-term. Just trying to work out what the general consensus is and if it is likely to be a good idea.

Thanks all in advance :beer:

Hodge58

Rates are unlikely to come down but there was an interest rate rise a while ago which suggests the BOE is giving themselves room to move if Brexit goes wrong (not a lot of room) If the maths works in costing then i would go for a lower rate. Having said that lenders are keen to lend as mort approvals are falling so rates may move down a smidge.. In case you wonder if my view is worth anything I have been a Director in mortgage and personal finance investments for over 30 years.

getmore4less

You are really looking at a 2 year period initially.
Using interest only
saving (2.64-1.99)= 0.65% 2 years 1.3% ERC 2%.

Down 0.7% at year 2.

What rate can you get in 2 years, you then work out the next 3 years.

Don't forget fees.

Run the numbers for the same payment and adding the erc/fees to see what's left.

Hodge58

With rates this low why fix for 2 years, they can't go much lower and will surely increase. In 2 years you have more fees and the risk of higher rates