mortgage deal ending, hoping to move within next year, what to do about deal

headsashed

So my current mortgage deal 2.2ish % is about to end. Im hoping to move house within the next year, but i also like the certainty of being on a fixed rate. If i go to variable rate it will go up tp 4.49%. My current lender is offering 3 deals 2 years fixed 3%, 5 years fixed 2.9% and 10 years fixed 2.5% for a new deal. Would it be sensible to lock in another fixed rate if i'm going to move. should i go for the shortest one with the thought of possibly incurring fees in i move? The longest seems more attractive but i suspect wouldnt be a good move. Any thoughts?

fewcloudy

headsashed said:

So my current mortgage deal 2.2ish % is about to end. Im hoping to move house within the next year, but i also like the certainty of being on a fixed rate. If i go to variable rate it will go up tp 4.49%. My current lender is offering 3 deals 2 years fixed 3%, 5 years fixed 2.9% and 10 years fixed 2.5% for a new deal. Would it be sensible to lock in another fixed rate if i'm going to move. should i go for the shortest one with the thought of possibly incurring fees in i move? The longest seems more attractive but i suspect wouldnt be a good move. Any thoughts?

Are you being serious? You only suspect that wouldn't be a good move?

Please give much more information such as size of mortgage, current payment per month, plus what it will be on these various rates etc. and what the ERC is on the new deals.

headsashed

£45,000 mortgage, 13 years left. Currently pay £350 month. Rough payments would be £400 on variable, £375 on 2 year deal, £370 on 5 year and £360 on 10 year. About 30% ltv.. etc 2% max on 2 year. 5% initially in 5 yr then going down 1% a year on 5 year. 6% for next 5 years then going down 1% a year on 10 year  

jelajelavic

You will likely pay an early repayment charge to get out of a fixed rate mortgage deal. An alternative to rolling onto the variable rate with your current lender is to get a tracker deal for 2 years (with current or different lender), most don't have an early repayment charge.

You would have exposure to interest rate increases, that should be preferable to the early repayment charge and the very high standard variable rate. Although it does depend on your specific circumstances and deals available to you, also need to factor in the fee for a new deal and how long you end up on it before repaying early.

I am in a similar position and looking to re-mortgage to a different lender for a 2 year tracker, as the margin above base rate is lower and as there is no early repayment charge it gives me the flexibility on moving house and repaying this mortgage. It works out I need to have it for circa 4 months for the product fee to be worth paying

K_S

headsashed said:

So my current mortgage deal 2.2ish % is about to end. Im hoping to move house within the next year, but i also like the certainty of being on a fixed rate. If i go to variable rate it will go up tp 4.49%. My current lender is offering 3 deals 2 years fixed 3%, 5 years fixed 2.9% and 10 years fixed 2.5% for a new deal. Would it be sensible to lock in another fixed rate if i'm going to move. should i go for the shortest one with the thought of possibly incurring fees in i move? The longest seems more attractive but i suspect wouldnt be a good move. Any thoughts?

@headsashed

If the mortgage product allows porting, you don't expect to need to maximise borrowing when you move, and you expect to buy a normal non-new-build freehold house, you could consider moving to another fix and relying on being able to port your fix when the time comes for a move.

If you think you might need to maximise borrowing, then it may be worth making sure that you have access to the whole of market when the time comes for a move so you are not tied to the policy and criteria of your current lender. You could achieve this by switching to a no/low-fee no/low-ERC tracker/discount product, either with your current lender (if they offer one) or by re-mortgaging to a new lender that offers a suitable product.

headsashed

K_S said:

headsashed said:

So my current mortgage deal 2.2ish % is about to end. Im hoping to move house within the next year, but i also like the certainty of being on a fixed rate. If i go to variable rate it will go up tp 4.49%. My current lender is offering 3 deals 2 years fixed 3%, 5 years fixed 2.9% and 10 years fixed 2.5% for a new deal. Would it be sensible to lock in another fixed rate if i'm going to move. should i go for the shortest one with the thought of possibly incurring fees in i move? The longest seems more attractive but i suspect wouldnt be a good move. Any thoughts?

@headsashed

If the mortgage product allows porting, you don't expect to need to maximise borrowing when you move, and you expect to buy a normal non-new-build freehold house, you could consider moving to another fix and relying on being able to port your fix when the time comes for a move.

If you think you might need to maximise borrowing, then it may be worth making sure that you have access to the whole of market when the time comes for a move so you are not tied to the policy and criteria of your current lender. You could achieve this by switching to a no/low-fee no/low-ERC tracker/discount product, either with your current lender (if they offer one) or by re-mortgaging to a new lender that offers a suitable product.

Thats great thanks, i will look into that