Remortgaging Options

aussie_in_wales

Hi MSE's

I currently have a two part mortgage and the original 5 year fix has finally reached the point that I can start looking to join the two parts together.

I'm going to stay with my current lender as the other deals I've found aren't that much better to justify the hassle and costs of moving lender.

My current mortgage is for ~ £71 600 and I have 9 years left (I want to pay it off asap really)

My current lender is offering the following with no fees.
2 year fix 1.69% - £729.41/month
3 year fix 1.69% - £729.41/month
5 year fix 1.89% - £763.41/month
7 year fix 1.89% - £763.41/month

I'm not planning on moving at any point and all the options allow 10% O.P per year. After the fixed period the current SVR is 4%

I am trying to work out if I would be best going for the 3 year or 5 year options. (2 years seems a little too short for me given the current uncertainty around the impacts of Brexit and 7 years seems like a very long time!)

I've tried some calculators to try to work out the difference in the deals but am having trouble in working this out.

Can anyone help with this?

Also if you think my reasoning for my choices seems daft then please let me know.

Thank you

Lilla_D

Hi there,

Ultimately, you could only really compare the overall costs for the 2 scenarios, if you knew your interest rate for the years following the 3yr deal period. At this point, this is not possible.

Of course, you could just revert to the lender's standard variable rate after 3 years, which will probably be the cheapest option given the small mortgage amount and the short mortgage term. Alas, the standard variable rate could well change during the next 3 years.

If you then added up the payments for the 5 years for both scenarios, then you'd have a starting point. However, once you introduce overpayments, the whole calculation goes out of the window, because a lot will depend on when you make the overpayments and how much they will be each time.

If you google "mortgage overpayment calculator", you should be able to find some on the internet to help with your deliberations.

spokenivandrago

I would definitely go for the 7 year fix. That is a crazy low rate. Bag it quick before it goes. Rates are only going to go up. You will also save remortgage costs against the other products. You would be mad not to fix for 7 years IMO. Best of luck.

[Deleted User]

Depends if you are looking to make overpayments or not. If so then 7 year fix may leave you stuck with a mortgage you want to clear but cant.

5 year fix and then stick on a 2 year tracker with no ERC's would work if you were thinking of clearing within that period

Really interest has such little impact for you here as your balance and term are coming towards the end.
Its more a question of:

Do you want to just get it fixed and forget about it until the end of the mortgage?
Are you likely to overpay and clear earlier than 7 years?

I personally prefer an easy life so I would just go for a longer fix based on the differences in payments here. If it was hundreds of pounds its a different decision

getmore4less

How much are you planning to pay each month?

With a 0.2% difference the lower rate won't give you much protection for the following years.
I can work it out if you can't

aussie_in_wales

Thank you everyone.

I will probably only overpay £200pcm as I am wanting to do a lot of home improvements.

So the 7 year fix does make sense, especially as the rate is the same as the 5 year fix.

I like to know what i'm going to be paying as I'm the sole mortgage holder so am a bit risk adverse.

aussie_in_wales

getmore4less wrote: »

How much are you planning to pay each month?

With a 0.2% difference the lower rate won't give you much protection for the following years.
I can work it out if you can't

At the moment I am paying £790 as the second half of the mortgage is on the 4% SVR and the original half of the mortgage is at 3.49%. So either way there will be a reduction on what I'm currently paying.