Shall I pay the penalty and start a new fix rate now

deborahxc123

Hello everyone, my 2-year fixed rate will end at June, 2023. Based on the current interest rate change, I am bit worried how my mortgage rate will be by then. I contacted my Halifax and they say if I pay 5000 pounds penalty now, I can have 3.49% for 5 year fixed and 3.67% for 2 year fixed. Any idea on the rate for next year? Will it be crazily high, like 4% or 5%? Shall I fix my rate now or if so, 5 year or 2 year? Thank you!

london21

deborahxc123 said:

Hello everyone, my 2-year fixed rate will end at June, 2023. Based on the current interest rate change, I am bit worried how my mortgage rate will be by then. I contacted my Halifax and they say if I pay 5000 pounds penalty now, I can have 3.49% for 5 year fixed and 3.67% for 2 year fixed. Any idea on the rate for next year? Will it be crazily high, like 4% or 5%? Shall I fix my rate now or if so, 5 year or 2 year? Thank you!

No one really knows what the interest rates will go up to but in 2022 there are likely 2 more increases.

depends also on your mortgage amount.

I personally will not go for the 2 years; 5 years is better and more certainty. 

deborahxc123

london21 said:

deborahxc123 said:

Hello everyone, my 2-year fixed rate will end at June, 2023. Based on the current interest rate change, I am bit worried how my mortgage rate will be by then. I contacted my Halifax and they say if I pay 5000 pounds penalty now, I can have 3.49% for 5 year fixed and 3.67% for 2 year fixed. Any idea on the rate for next year? Will it be crazily high, like 4% or 5%? Shall I fix my rate now or if so, 5 year or 2 year? Thank you!

No one really knows what the interest rates will go up to but in 2022 there are likely 2 more increases.

depends also on your mortgage amount.

I personally will not go for the 2 years; 5 years is better and more certainty. 

Thank you for the reply. I think in next year June, the interest rate will definitely higher than now, right? If I switch to 3.49% now, I will pay around 300 pounds more every month, which is OK for me. But anything more will make me feel stressful. Probably I should pay that penalty to get some certainty/

elsien

Where is your 5K redemption fee going to come from? 

deborahxc123

elsien said:

Where is your 5K redemption fee going to come from? 

I need to pay cash upfront before I can switch to a new fixed rate scheme

elsien

Have you done the sums to work out what the interest rate would have to go up to, to balance out the early repayment fee? 

deborahxc123

elsien said:

Have you done the sums to work out what the interest rate would have to go up to, to balance out the early repayment fee? 

If the mortgage rate goes higher than 4% (perhaps the base rate goes up to 2.25 or above, my early repayment will be balanced)

Ballymoney

Remember to factor in the £300 extra a month you’ll be paying between now and June on top of the £5k.

london21

If you were to move lenders considering if they offer a more favourable rate, you can delay the new mortgage starting by a few months.

Also if you did not have the funds upfront can add to the mortgage (cheaper to pay upfront)

Do the calculations first to see if favourable.

No one knows what rates will be in 2-3 years’ time but if you want certainty god you are thinking about it now.

The loan amount, LTV etc all have an impact.