Remortgaging prior to potential house move

Dom876

Hello,

I have seen variants of this question but none that are exactly our scenario.

We are coming to the end of our fixed rate and looking to remortgage, with 21 years nominally left on the mortgage. Our LTV has now gone to below 60% so are qualifying for the top rates. We are also considering whether we want to move house in the next couple of years.

We are considering getting a 10 year fixed rate and extending the term back up to 25 years, the idea being that this “locks in” a reasonable portion of the mortgage at a low rate, for a long time (basically making the repayments as low as possible). If/when we move, we would port this mortgage, and get the second mortgage at circa 80% LTV, more than likely at a worse rate than the original portion. We would then make overpayments where possible on the 80% LTV portion.

I am aware that there is a risk that we would need to reapply when getting the second mortgage, and could be turned down leaving us with a hefty ERC to pay.

1.       Is my logic ok and this an acceptable/common thing to do?

2.       I appreciate it’s hard to tell without looking at individual circumstances, but are the checks when getting a second mortgage more stringent (i.e. higher chance of being turned away)?

The alternative is to stay on a variable rate/a short term fixed rate now and try to get a single mortgage when we move, all at the 80% rate, but this will obviously work out more expensive.

Ultimately, is the risk vs reward of locking in a cheap rate now worth it?

goodwithsaving

If you're going to move within the next 18 months, why don't you get a tracker? Then you'll have no ERC to pay when you do redeem it, and can bundle the new house in with 1 product instead of 2. A tracker isn't fixed, granted, but it will no doubt save you money when you come to move and don't pay penalties, as well as making things much simpler.