Child planning and mortgage term

Windofchange

Hi all,

We are one of the 373,000 currently stuck in property transaction limbo, but hopefully we can get exchanged and completed soon. Our mortgage offer expires next month, and as I understand it, it would be a case of rekeying the information, and should be pretty straight forward as nothing about our situation has changed from January. This brought a thought to mind however. We went for a 2 year fixed rate deal, and I was planning to see which way interest rates and the economy are going at the end of that, and potentially switch onto a 5 year deal with a better LTV. However, we are trying to start a family in the coming months, and I'm not sure my plan now makes the most financial sense? My worry is that if we are lucky in the next 6 months or so, then she'll have 9 months of bun cooking, and then be on maternity leave for a year. This will mean that when we come to remortgage to another fixed rate deal, she will either be on maternity leave, or have only just returned to work, and likely on reduced hours, which will obviously impact our affordability calculations. 

The draw now of going straight for a 5 year deal is that it gives us plenty of time to start our family, and then for us to get back to some sort of normality with working before we would then need to have our finances assessed again for a remortgage. We are both very lucky in that the hospitals we work at have a creche and good discounts for staff members, so the childcare bit shouldn't hit too hard on our affordability, especially given we are not maxing our borrowing at present (around 4 x joint salary), and therefore have some slip built in for banks offering us less due to having a dependant. 

The flip side of this is that doing some reading around, it doesn't seem to be anywhere near impossible to get a remortgage based on 100% of income where the bank takes the last pre-maternity leave pay slip and a letter from HR stating the terms and conditions of return to work, With this in mind, it doesn't seem that most of the main highstreet lenders are that fussed, and we will save about £120 a month in interest on the 2 year fixed rate compared with the 5. 

Anyone got any experience of this, or suggestions? The other thing currently is that we are borrowing at 90% LTV, and given the current landscape, I'm not even sure that 90% LTV products are even available? It might be that we are headed down the 2 year fixed rate route regardless of thoughts? 

Thrugelmir

A five year fix would give you peace of mind. Knowing what your monthly outgoings will be. Enabling you build a suitable reserve. While you are still working overpay the mortgage a little as well. The future holds great uncertainty. 

[Deleted User]

Is say definitely a 5 year fix. Its surprising just how quick those 2 years come round. At the end of the fix, if you are switching deals with the same lender, its not on affordability, but just pressing a few buttons if you switch online. 

Notwithstanding that, Id still ( and always do myself) pick 5 year deals for peace of mind 

Windofchange

Densol said:

Is say definitely a 5 year fix. Its surprising just how quick those 2 years come round. At the end of the fix, if you are switching deals with the same lender, its not on affordability, but just pressing a few buttons if you switch online. 

Notwithstanding that, Id still ( and always do myself) pick 5 year deals for peace of mind 

Thanks for the input both. In terms of re-mortgaging, my previous mortgaged place with my ex was on a 5 year fix term, and we split before that came up, so I have no experience of going through the re-mortgaging process. I'll be with Halifax should we ever get to complete on our property, and from what I can gather from above, you are saying that if we stay with them we won't need to go through the providing of 3 months of payslips, proof of ID etc etc that we did recently when we got the offer? From shopping around when getting our mortgage offer, there was very little difference in rates between the high street banks, so I can see that I would be happy to stay with Halifax. I will potentially be able to just logon to my account and pick a new product in two years time, and they won't ask any questions? They will want to re-value the house at least will they not?