Borrowing more when porting and hedging against further base rate rises

james.parsons

Hi,

We are hopefully going to move house in the next 12-18months, however I'm a little concerned with how the base rate seems set to increase quite a bit over that time period.

I'm considering fixing our current mortgage ( £100K with Nationwide) for 5 years to lock in low interest rate. However when we come to move we would have to borrow more for the new property (Probably another £80K). My question is, would this new borrowing have to also be with Nationwide or are we able to borrow the additional amount from another provider?

Cheers,

eddddy

james.parsons said:

My question is, would this new borrowing have to also be with Nationwide or are we able to borrow the additional amount from another provider?

The new/extra borrowing would almost certainly have to be with Nationwide.

I expect you realise, but if, for example, you needed a mortgage of £150k for the new place...

• You would continue to borrow £100k on the current fixed rate terms for the remainder of the 5 years

• You would borrow the extra £50k on whatever terms Nationwide are offering when you move. (Which might be better or worse than the current fixed rate)

steve866

I looked into this before for a different reason. The downsides for me were:

1) you are limited to only Nationwide when you move
2) Nationwide might not have the best rates on at the time 
3) Nationwide might not give you mortgage your want at the time of moving (affordability, down valuation of house etc)
4) It can be a pain stuck with 2 products fixed until different points of time 

Having said that, I can see why it might make sense for you. You might want to check what the early repayment charge would be so you know you can get out of it worse case.

HotPantsCruiser

james.parsons said:

Hi,

We are hopefully going to move house in the next 12-18months, however I'm a little concerned with how the base rate seems set to increase quite a bit over that time period.

I'm considering fixing our current mortgage ( £100K with Nationwide) for 5 years to lock in low interest rate. However when we come to move we would have to borrow more for the new property (Probably another £80K). My question is, would this new borrowing have to also be with Nationwide or are we able to borrow the additional amount from another provider?

Cheers,

At least interest rates are rising from a very low starting point?

HotPantsCruiser

eddddy said:

james.parsons said:

My question is, would this new borrowing have to also be with Nationwide or are we able to borrow the additional amount from another provider?

The new/extra borrowing would almost certainly have to be with Nationwide.

I expect you realise, but if, for example, you needed a mortgage of £150k for the new place...

• You would continue to borrow £100k on the current fixed rate terms for the remainder of the 5 years

• You would borrow the extra £50k on whatever terms Nationwide are offering when you move. (Which might be better or worse than the current fixed rate)

How competitive are Nationwide on mortgage rates?

james.parsons

I can fix for 5 years no fee for 1.89%. Considering the BoE has indicated it wants to move the base rate to 1.5% by 2023 I'd be locking in at least a 1% in the near term. That would be aprox £1000 per year if remortgaging  £100K. 

HotPantsCruiser

Ok, how long do you think those levels of fix will be around?

james.parsons

Probably not long at all considering "nearly half of the Monetary Policy Committee (MPC) members voted for a hike to 0.75%" at the last BoE rate setting meeting where it was raised to 0.5%. 

HotPantsCruiser

james.parsons said:

Probably not long at all considering "nearly half of the Monetary Policy Committee (MPC) members voted for a hike to 0.75%" at the last BoE rate setting meeting where it was raised to 0.5%. 

How high do you think interest rates could realistically go?

HotPantsCruiser

james.parsons said:

I can fix for 5 years no fee for 1.89%. Considering the BoE has indicated it wants to move the base rate to 1.5% by 2023 I'd be locking in at least a 1% in the near term. That would be aprox £1000 per year if remortgaging  £100K. 

Ok, still very low rates at the moment.

housebuyer143

Why don't you borrow more now if you are 100% moving?
If your current house has £150k equity in it then remortgage with capital raising and fix now and keep the money until you move? Then you only need one mortgage and its on a cheap rate when you port?