5-year fixed coming to an in Oct 2023

Saint84

hi all

my 5-year fixed term mortgage is coming to an end next year (at c1.94% rate). With the way interest rates going at the moment, i can imagine this hitting 5% next year?

is there anything i can do now, or do i have to wait 6 months before the term ends before i can do anything. I am with HSBC.

any advice? are these the options i have

1) wait until Nov 23 and take a view then 
2) wait until Nov 23 and go on tracker for 3-6 months, hoping rates will go down in 2024 and lock into 5 years then?
3) lock in a new rate in May 2023?
4) re-mortgage early but assume  there is a big penalty charge for doing so.

housebuyer143

I would personally just wait and see what happens. Ride the good rate and then see where the land lies next year. 

K_S

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

 Saint84 said:

hi all

my 5-year fixed term mortgage is coming to an end next year (at c1.94% rate). With the way interest rates going at the moment, i can imagine this hitting 5% next year?

is there anything i can do now, or do i have to wait 6 months before the term ends before i can do anything. I am with HSBC.

any advice? are these the options i have

1) wait until Nov 23 and take a view then 
2) wait until Nov 23 and go on tracker for 3-6 months, hoping rates will go down in 2024 and lock into 5 years then?
3) lock in a new rate in May 2023?
4) re-mortgage early but assume  there is a big penalty charge for doing so.

Saint84

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

K_S

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

saucer

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

Without wanting to gate crash the OPs thread I wanted to ask a question about your suggestion. I am similarly in the process of remortgaging with First Direct. We are on a cheap tracker but, unlike the OP, it has years to run. I’m concerned where rates are going so a fix seems sensible. If they offer us the fix, can we ask for it or be delayed? How do we find out how long they will reliably honour it (beyond just asking)? Thanks 

K_S

@saucer Apologies, I know very little about FD as it's a direct only lender.

As far as their parent company (HSBC) is concerned, the remortgage offer is valid for 6 months from offer date and there is no standard process to extend it beyond that.

saucer said:

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

Without wanting to gate crash the OPs thread I wanted to ask a question about your suggestion. I am similarly in the process of remortgaging with First Direct. We are on a cheap tracker but, unlike the OP, it has years to run. I’m concerned where rates are going so a fix seems sensible. If they offer us the fix, can we ask for it or be delayed? How do we find out how long they will reliably honour it (beyond just asking)? Thanks 

Saint84

saucer said:

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

Without wanting to gate crash the OPs thread I wanted to ask a question about your suggestion. I am similarly in the process of remortgaging with First Direct. We are on a cheap tracker but, unlike the OP, it has years to run. I’m concerned where rates are going so a fix seems sensible. If they offer us the fix, can we ask for it or be delayed? How do we find out how long they will reliably honour it (beyond just asking)? Thanks 

saucer said:

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

Thank you for that, i will need to look into this properly. how do i go about finding/choosing a broker? any tips (aside from google)

saucer

K_S said:

@saucer Apologies, I know very little about FD as it's a direct only lender.

As far as their parent company (HSBC) is concerned, the remortgage offer is valid for 6 months from offer date and there is no standard process to extend it beyond that.

saucer said:

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

Without wanting to gate crash the OPs thread I wanted to ask a question about your suggestion. I am similarly in the process of remortgaging with First Direct. We are on a cheap tracker but, unlike the OP, it has years to run. I’m concerned where rates are going so a fix seems sensible. If they offer us the fix, can we ask for it or be delayed? How do we find out how long they will reliably honour it (beyond just asking)? Thanks 

That's really helpful thank you.  I have an appointment with a FD mortgage advisor on Thursday (fortuitiously before the BoE announcement).  I'll keep that option up my sleeve.  It would be great to think we might be able to stick with our current variable (BoE +.49) for a few months to see how it goes.  We can all see scenarios where inflation runs away and they need to keep increasing rates, but also where the recession makes decreases (albeit not to where we were ) a bit more likely.  My gut feeling is that it is safer to fix at a 3.6% or so rather than stay on the tracker but it is a close run thing.  

K_S

saucer said:

K_S said:

@saucer Apologies, I know very little about FD as it's a direct only lender.

As far as their parent company (HSBC) is concerned, the remortgage offer is valid for 6 months from offer date and there is no standard process to extend it beyond that.

saucer said:

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

Without wanting to gate crash the OPs thread I wanted to ask a question about your suggestion. I am similarly in the process of remortgaging with First Direct. We are on a cheap tracker but, unlike the OP, it has years to run. I’m concerned where rates are going so a fix seems sensible. If they offer us the fix, can we ask for it or be delayed? How do we find out how long they will reliably honour it (beyond just asking)? Thanks 

That's really helpful thank you.  I have an appointment with a FD mortgage advisor on Thursday (fortuitiously before the BoE announcement).  I'll keep that option up my sleeve.  It would be great to think we might be able to stick with our current variable (BoE +.49) for a few months to see how it goes.  We can all see scenarios where inflation runs away and they need to keep increasing rates, but also where the recession makes decreases (albeit not to where we were ) a bit more likely.  My gut feeling is that it is safer to fix at a 3.6% or so rather than stay on the tracker but it is a close run thing.  

@saucer Sorry to be pedantic but its an important distinction. Is this a remortgage (changing to a new lender) or a product-transfer/product-switch/rate-switch/PT (staying with the same lender). The 3.6% rate seems quite low for a remortgage rate but par for the course for a PT rate if you're already with FD.

I don't know about FD but for an HSBC product-transfer, the longest that they will allow you to delay the switch on a PT is 4 months (120 days to be precise).

saucer

K_S said:

saucer said:

K_S said:

@saucer Apologies, I know very little about FD as it's a direct only lender.

As far as their parent company (HSBC) is concerned, the remortgage offer is valid for 6 months from offer date and there is no standard process to extend it beyond that.

saucer said:

K_S said:

@saint84 You're lucky that you're with HSBC, as their pro-rated ERC structure gives you a lot more flexibility when compared to other lenders who charge a certain amount until the very last day of the fixed period.

With respect to the period up to which you can potentially 'lock-in' a rate, with most mainstream lenders you have a 6 month validity on the remortgage offer, which is either from the date of application or the date of offer. A couple of lenders will also have fixed product end dates which are updated every 3 months or so, so based on timing you can get an offer validity of anywhere between 5-7 months or so.

To go beyond that, some lenders will allow you to stretch that period through an extension to the initial offer which (depending on the specific lender) can be an additional 1 month, 3 months or even 6 months (which is what I meant by 6+6). Nationwide will allow you to 'reserve' a rate at DIP stage for 90 days, and when the offer is issued you get another 6 months, so effectively you could stretch a Nationwide product for around 8 months.

I would certainly recommend considering the use of a broker as some of the above (like the Nationwide product reservation) is only available to brokers afaik, but do be clear to them about what you're trying to achieve here so that they can advise you accordingly.

Saint84 said:

K_S said:

@saint84 If your main worry is radically higher interest rates same time next year, you have a few more options.

- You could lock in a rate now by getting a remortgage offer (free val, free legals, any fee added to the loan) that will be valid to 6/7/9 months in the future. And then when you have a month left until expiry do the numbers again and reassess whether it might be worth paying the ERC and remortgaging or avoiding ERC and doing a product switch or remortgage.

- you could also wait to November/December and then lock in a remortgage rate with a lender that will consider 6+6 months validity allowing you to use it to remortgage in October 2023.

There are quite a few different approaches to minimising the risk, if you have a broker it's something they should be able to help with.

Hi @K_S, ah - I did not even consider that as an option. I just checked my mortage details:

- it ends in Nov 2023
- i can lock in a new deal in 4 months

i did not appreciate that you can get a re-mortgage offer up to 6-7-9 months in advance. i assume then because i have less months to expiry there is a much reduced ERC?

regarding the second option - what does 6+6 month validity means?

is it best if i speak to a broker about all of this rather than speaking to individuals banks i assume? quite new to this area, so any advice would be appreciated.

Without wanting to gate crash the OPs thread I wanted to ask a question about your suggestion. I am similarly in the process of remortgaging with First Direct. We are on a cheap tracker but, unlike the OP, it has years to run. I’m concerned where rates are going so a fix seems sensible. If they offer us the fix, can we ask for it or be delayed? How do we find out how long they will reliably honour it (beyond just asking)? Thanks 

That's really helpful thank you.  I have an appointment with a FD mortgage advisor on Thursday (fortuitiously before the BoE announcement).  I'll keep that option up my sleeve.  It would be great to think we might be able to stick with our current variable (BoE +.49) for a few months to see how it goes.  We can all see scenarios where inflation runs away and they need to keep increasing rates, but also where the recession makes decreases (albeit not to where we were ) a bit more likely.  My gut feeling is that it is safer to fix at a 3.6% or so rather than stay on the tracker but it is a close run thing.  

@saucer Sorry to be pedantic but its an important distinction. Is this a remortgage (changing to a new lender) or a product-transfer/product-switch/rate-switch/PT (staying with the same lender). The 3.6% rate seems quite low for a remortgage rate but par for the course for a PT rate if you're already with FD.

I don't know about FD but for an HSBC product-transfer, the longest that they will allow you to delay the switch on a PT is 4 months (120 days to be precise).

Pedantic is good, and sorry to the OP if I have hi-jacked their thread a bit :-).  I appreciate your thoughts.

You are right that it is not a remortgage but a product switch.  3.6 is what it is showing at the moment but that could change through the week.  Looking on the website they say that the Agreement in Principle lasts 6 months but, for me, the crucial bit is the reservation of the rate which they don't do until the next meeting which is the 'mortgage advisor' call.  I am assuming they will ask me to book the rate subject to the £449 fee at that point.  It would be great if that secures the rate for some months, but that almost seems too good to be true. Do you think they will be happy to tell me explicitly?

Thank you again