Fix my mortgage?

kitrat

This comes under nice problems to have. 

I stand to inherit enough money to pay off my mortgage (about £60k) but it is just waiting for the property that forms the estate to be sold. I thought it would be well in progress by now but it's not yet on the market due to slow-moving relatives (I am not involved in the estate distribution in any way). 

In light of expecting it to be sold by the end of this year I had let my mortgage slip onto a variable rate earlier this year rather than fix again so that I could pay it off when the money came through without incurring an early repayment charge. But now interest rates are set to go crazy and my monthly repayments have already risen about 20% since my fixed term ended. It makes me very nervous. I think I could loose more than I would have saved by just having fixed again for two years back in Spring.

I don't really have faith that this house sale will move quickly and also there's a risk that if house prices were to drop dramatically in the meantime that I wouldn't get as much as I was initially told.

So I suppose it makes sense to fix for two years and just repay within the 10% limit should I receive some money earlier than 2 years time? 

I could cash in my NS&I certificate which holds my emergency fund (£6000) plus maybe £2-3k from my current account and repay as much as possible before fixing? But then I loose much of the interest earned on my certificate and the future interest it would have earned. I don't really know if that's worth it? I am quite secure in my work (NHS) so wouldn't anticipate ever needing my emergency fund, I'm not worried about that aspect. I'm just confused about what I should do. Nice problems to have as I said. 

kitrat

Oh and I also meant to ask - if I was to cash in my certificate I think I loose less interest if I wait till it moves into its next investment year which will be in about two weeks time. Do you think I have that long before the current mortgage rates rise on fixed term offers? 

AnnieB2018

Switch your rate to a tracker, fee free one. They usually have no early repayment charges. Tracker rates are lower than your standard variable rate. Then you can fix once the inheritance kicks in. You don’t say what the mortgage amount and term is but for an average mortgage this strategy should be good.

AnnieB2018

O, if the £60k pays your mortgage off in full then it’s defo worth just getting onto a tracker rate and defo not worth being in a fix (unless it’s a fix with zero early repayment fees).