To remortgage 1 year early?

nicmul83

I'm sure there a re a lot of people in the same shoes as me here, but I'm starting to panic about remortgaging.

We've got another year left on our mortgage at 1.49% so this time next year we'll need to sort out a new mortgage.

Do we remortgage now, pay the £3,500 early settlement fee and lock something in for likely around 4% for somewhere between 2-5 years... (this will double our mortgage cost from £1500 to about £3000)

OR do we wait, lap up the 1.49% for another year and see where we are in a year? Maybe 5-7% for a 2 year term?



Honestly the market is madness and the UK will come to a halt at this rate.

CSL0183

Inflation has just dropped slightly. Make your mind up after the next BOE meeting next week. If they increase it again, get in quite sharpish and try and fix at current rates (some banks take a week or two after the announcement to adjust their mortgage market). This will let you know what the BOE committee members are thinking. 

If the BOE freeze them then just delay the decision another 4-6wks until the next one.

If they up them another 0.5% for example next week then panic in the markets surely will set in reference the exact question you are asking. 

It’s a gamble, only you know your own maths. 

simon_or

OP - if you have a broker speak to them and see what they recommend. I have a BTL fix ending in May and my broker has just put in an application with a bank that will give 6 months validity plus a 3 month extension so I can lock in a rate and avoid ERC. She said there are even options which can be used to lock in a rate 11 months in advance.

I don't see how going from 1.5% to 4% on a capital repayment mortgage will double your monthly mortgage payment? Are you sure you've done the numbers correctly? You can also look at stretching the mortgage term to lower monthly payments, my residential goes to 80 with a high street bank.

nicmul83

simon_or said:

OP - if you have a broker speak to them and see what they recommend. I have a BTL fix ending in May and my broker has just put in an application with a bank that will give 6 months validity plus a 3 month extension so I can lock in a rate and avoid ERC. She said there are even options which can be used to lock in a rate 11 months in advance.

I don't see how going from 1.5% to 4% on a capital repayment mortgage will double your monthly mortgage payment? Are you sure you've done the numbers correctly? You can also look at stretching the mortgage term to lower monthly payments, my residential goes to 80 with a high street bank.

I had used a calculator online which showed it as a doubling in cost, but you are indeed correct, that isn't true. Looking elsewhere at 4% it comes out about 33% more than my current payments

K_S

nicmul83 said:

I'm sure there a re a lot of people in the same shoes as me here, but I'm starting to panic about remortgaging.

We've got another year left on our mortgage at 1.49% so this time next year we'll need to sort out a new mortgage.

Do we remortgage now, pay the £3,500 early settlement fee and lock something in for likely around 4% for somewhere between 2-5 years... (this will double our mortgage cost from £1500 to about £3000)

OR do we wait, lap up the 1.49% for another year and see where we are in a year? Maybe 5-7% for a 2 year term?

Honestly the market is madness and the UK will come to a halt at this rate.

@nicmul83 With a £3,500 ERC, once you're within 12 months from the end of the fix, you could somewhat hedge your bets by getting a mortgage offer now and then in 6 months time doing the numbers to reassess whether to pay the ERC and complete on it or not.