Remortgage - help! 2y, 3y or 5y fix, offset or not?

blueskyscenario

What are "conservative" lenders (e.g. the building societies) comfortable lending as a multiple of salary? (trying to work out what 'minimum' income would need to be in 2y if I go for the shorter fix, assuming job circumstances change) Thank you!

[Deleted User]

blueskyscenario wrote: »

What are "conservative" lenders (e.g. the building societies) comfortable lending as a multiple of salary? (trying to work out what 'minimum' income would need to be in 2y if I go for the shorter fix, assuming job circumstances change) Thank you!

Depending on the makeup of the case, 4.49x salary tends to be fairly conservative at the moment. Some going up to 5, a couple now going even beyond that.

dimbo61

I love offset mortgages for the very reason you mention.
You need to keep a large cash pot to pay for all the BIG things in life.
When the school fees or tax bill is due you can't say will you wait a few weeks while I sell some stocks and shares Think Woodford!
Having cash to buy something outright means you can haggle big style.
Your only paying interest on the outstanding balance between you mortgage balance and the offset savings.
As your mortgage payment is the normal amount ( Ignoring the offset savings ) you are paying off the mortgage quicker.
We were also able to have payment holidays as we had built up such a large overpayment pot.
Taking years off the mortgage saves thousands of pounds in Interest and means you pay the mortgage off early.

enthusiasticsaver

Usually people go for longer fixed rate terms if they are close to affordability levels and a rise in interest rates would put them in serious jeopardy. As you have £100k in cash I would not say that applied to you and you have said you cannot guarantee you will not want to move in that 5 years and an ERC on a £390k mortgage would be high. For that reason I would not choose a 5 year fix but no one can tell for sure what will happen to interest rates so there is always an element of uncertainty.

However you have also said your income may reduce in 2 years time so you might want to consider that in your final decision. Personally if that was me I would take this opportunity to reduce it by overpaying or using the offset option. I think that there is no cut and dried solution for you as you have found by asking three different brokers. There are pluses and minuses for taking any of the deals. Do what will give you most security

getmore4less

Your premium for offsetting is 0.1%.

With mortgage rates you can get and the rates on savings being so close it needs the calculations doing on best option.

With your current payment and potential to overpay/save you could build up a healthy reserve to cover future rate rise or income drops.

The trick is to pick a lender good for retention deals


There will be very close to 0.75% base rise built in taki g the 2y.

You don't want the offset to reduce the contractual term, most don't what they really mean is it does not reduce the payment, you should still have the option to reset to full term and reduce the payment.

Which lender?

On the very limited information I would err towards cash preservation and a lender that has decent record on retention deals then go 2years



I would then crunch for savings or offset based on 2year cash flow guesstimate.

A serious review of spending to preserve even more cash.


For the record I went with lifetime offset tracker at base+ 0.95% never had to change again.
Also in those days credit cards were giving away money free that you could offset.
(really free no fees had over £40k offset using free money, stoozing)

The offset market has changed making the decision a little different now.