Remortgage blues

chillertwist209

Just coming to the end of a 2 year fix with Halifax.  Paying £996 per month on a mortgage of 259k.  Property worth 382k.
The best deal our broker can find us with no fee is staying with Halifax 3.34% interest rate and fixed for 5 years but we would be paying £1234 per month so not good news with everything else going up as well.  Our household bills are going to be up by around £5,000 incorporating the extra mortgage costs, utility rises and now our dentist wants £52 a month for going private 😫

We found a TSB 5 year fox on the MSE mortgage search which would be £1208 per month and our advisor can’t access it but says we could apply direct. However, I always worry the paperwork side will be a faff and there is always a risk of rejection with a new provider.  

We are already with Halifax so perhaps we should to just go with it… I am thinking no sub 3% mortgages will come out in the next week and, if anything, it looks like new products will only come with a higher rate.

People seem to be fixing over 5 years too.  We won’t be moving in that time but £1234 per month for 5 years is not a nice prospect ☹️    Although I guess it’s better than potentially facing more in 2 years time if rates are still bad (I saw a prediction of 5-6% by 2024 somewhere - eek) 

Can anyone give me some words of wisdom to help me make the decision?

Linton

Generally, interest rates at the moment are still historically low - the BoE rate is currently 1/3rd the value it was at any time from circa 1955-2008.  In that period the lowest new mortgage rate was 5%.   See https://www.bsa.org.uk/BSA/files/5c/5c180498-5e52-4a41-b022-5821c25f3cbd.pdf

So 5-6% mortage interest in the next few years does not sound unreasonable to me.  A 5 year fixed is probably delaying the inevitable.  On the other hand if your income rises with inflation it will be less of a problem.

I guess this does not help you very much!

Filed

Sadly this is going to be one for you to decide, as no one has a crystal ball!

Personally I am currently looking to remortgage and am locking in for 7 years at 3.2%. £1k a month. It's a long one, but one thing that is certain is the uncertainty of of the economy over the next decade. If rates drop low enough to warremt buying out of the mortgage that's always an option. 

As for lower rates elsewhere, grab the lowest you can. £25 x 12mo x 5yr = 1.5k saved, which you can put towards paying off the loan as an overpayment.
You can secure an offer from Halifax in the meantime to cover you. I believe the offer has to stand for 2 weeks from the point you are offered it.

An easy way to pay less on your mortgage may be to increase your retirement age, therefore loan payback time. It will cost more in the long run, but if it makes life more manageable for a few Years it's worth doing imo. 

london21

Check if the TSB is really available.

Every savings helps.

Looks like the next interest rate increase is in 4th August.

Bluebell1000

Check if it's cheaper to go for a mortgage with a fee as well. How do 10 year rates compare, assuming you aren't planning to move longer term?

Soot2006

I'm just going to comment on the dentist = that is extortionate. Shop around. You can get good dental insurance for less.

It's hard times isn't it

jimjames

Soot2006 said:

I'm just going to comment on the dentist = that is extortionate. Shop around. You can get good dental insurance for less.

You also don't need to have insurance or pay monthly. If your teeth don't need major work then PAYG might be cheaper. Insurance companies aren't selling policies for your benefit but to make money.

In terms of rates we've become accustomed to the low rates over the last 10+ years but they are an anomaly so locking in even at 3% could still be a very good deal if rates return to normal levels.

danlightbulb

Came on here to see if others were having this issue and your posts suggests they are.

My girlfriend's remortgage is due and she only has 11 years left with an LTV of below 40%. Best rate she can get fixed seems to be over 3% which is crazy. Only a month ago I secured a 90% LTV mortgage fixed for 5 years at 2.84%. How can the best she can get with <40% LTV be over 3%?

GoonerByron

In the same situation, can’t believe only 6/7 months ago I could have got a 10 year fix for under 1%. Best I can get now is 3.1% and that is increasing my mortgage over £250 a month even before the rates go up anymore 

SamanthaDawn

I'm house hunting at the moment and finding this too! We've missed out on a few properties since January, and now our budget has really shrunk with the rising interest rates (but house prices don't seem to have come down yet?!)

newfoundglory

I am currently grappling with exiting a 5 year fix at 1.79% early, by 7 months and so a penalty to pay, to re-fix at about 3.2%

The one thing I am struggling with, does anyone know how much potential further increases are factored into the current fixed rates?

I guess it depends if you think the terminal rate might be 2% or 3.5% or higher!

Thankfully I have premium bonds to cash in and pay the mortgage down a bit, but the question is, do i wait until November or even February or avoid an exit fee, I am thinking maybe not as I am betting we will see an increase every epc meeting now until xmas, and maybe not just 0.25%

And if you think inflation will be put ahead of the economy, the sky's the limit.