Remortgage - 2 year or 5 year fix

Jjh8

Hello,

I have a £210,000 mortgage with NatWest at 72% LTV and am looking to remortgage (23 years remaining). My wife and I can’t decide whether to fix for 5 years at 3.34% or 2 years at 3.34% (both with NatWest).

It would be great to lock in the rate for longer as in 2 years it seems likely that interest rates will be higher (though by how much is hard to say given the rate of inflation and BoE policy). However, we are relatively young and expect that within maybe 3 or 4 years we will have moved to a bigger place (currently in a flat) and don’t want to incur penalties. These decrease from 4.5% in the first year to 2.5% in Year 4 and 1.5% in Year 5.

So we have two questions that are factoring into our decision:

• The mortgage allows porting (avoiding early repayment charges). How easy would this be in practice, especially if moving to a larger house with a larger mortgage? Are there any disadvantages?

• We may choose to live abroad in the next few years and NatWest allows you to rent in the short term (a Consent to Let). Is this a straightforward process and what are the conditions?

Any comments or suggestions would be appreciated, including whether these are the right things to focus on.

K_S

Jjh8 said:

Hello,

I have a £210,000 mortgage with NatWest at 72% LTV and am looking to remortgage (23 years remaining). My wife and I can’t decide whether to fix for 5 years at 3.34% or 2 years at 3.34% (both with NatWest).

It would be great to lock in the rate for longer as in 2 years it seems likely that interest rates will be higher (though by how much is hard to say given the rate of inflation and BoE policy). However, we are relatively young and expect that within maybe 3 or 4 years we will have moved to a bigger place (currently in a flat) and don’t want to incur penalties. These decrease from 4.5% in the first year to 2.5% in Year 4 and 1.5% in Year 5.

So we have two questions that are factoring into our decision:

• The mortgage allows porting (avoiding early repayment charges). How easy would this be in practice, especially if moving to a larger house with a larger mortgage? Are there any disadvantages?

• We may choose to live abroad in the next few years and NatWest allows you to rent in the short term (a Consent to Let). Is this a straightforward process and what are the conditions?

Any comments or suggestions would be appreciated, including whether these are the right things to focus on.

@jjh8 To answer your two questions -

1. The main disadvantage with relying on porting is that, if you are looking to maximise borrowing, you are stuck with NatWest's policy and affordability calculations at a future point in time. So if NatWest won't lend what you need but Barclays will, you'll need to stump up the ERC to use Barclays.

2. NatWest has one of the better consent-to-let policies which allows clients to do a product-switch/product-transfer/rate-switch when on a CTL. I've not heard anything from clients to suggest that getting the CTL was complicated, but it's important to note that the borrower doesn't have a right to consent to let, it depends on their policy at the time.

yessuz

with rates going up, I just remortgaged with Santander at 3.44% for 5 year fix.

alternative was NatWest and 3.34% PA, but broker told me that deal will be pulled by COB today (hard sell here???) due to rate increase.

it had more or less same product fee (1k vs 995), as Santander, but since I have existing mortgage with them, for 0.1% annual I opted out for another Shaky house valuation and all remortgage fuss, all paperwork and just clicked 5 times on their website and good to go - new rate will start as soon as current deal ends.

K_S

yessuz said:

....but broker told me that deal will be pulled by COB today (hard sell here???) due to rate increase.

@yessuz Your broker was just stating facts

I got an email from NatWest at 2pm today telling me that they're upping rates tomorrow and that I have to submit any applications today evening to secure a current rate for clients.

Unfortunately, this has been quite common the past few months, and not just with NatWest.

yessuz

Yeah, but instead of rushing I went with existing lender - makes life easier a bit even for a small fe