Should I Refix Early

pippinpom

Hello
I currently have a 167,500 mortgage with 17 yrs left . I am on a fixed rate of 2.79 with Santander this ends on 4th July next year. After yesterdays news I am petrified as to what is going to happen . I rang Santander and discussed my options they said I could go onto a fixed rate of 4.09 and a £999 fee which will be added onto my mortgage as I haven’t got the money upfront or a rate of 4.19 and no fee. My payments would jump by £179 at the least . I really don’t want to be increasing by this with Christmas round the corner but am worried if I do nothing the situation will be much worse. I asked the Santander advisor would there be a possibility of an extension in July to the rate she said probably not at 2.79 but she was unsure as it is quite a while away. I really don’t know what to do . My partner thinks we should let it be and risk it but I’m terrified we could see our repayments double . What does everyone think should I fix now before it’s too late ? 

sammyjammy

Is there no early repayment charge for ending your fix early?

pippinpom

Yes £999 which they said I can add onto the mortgage balance.

K_S

@pippinpom Same question as above, is there an ERC? If you're coming off of a Santander 5 year fix, the ERC can be as high at 5% all the way to the last day of the fix.

pippinpom said:

Hello
I currently have a 167,500 mortgage with 17 yrs left . I am on a fixed rate of 2.79 with Santander this ends on 4th July next year. After yesterdays news I am petrified as to what is going to happen . I rang Santander and discussed my options they said I could go onto a fixed rate of 4.09 and a £999 fee which will be added onto my mortgage as I haven’t got the money upfront or a rate of 4.19 and no fee. My payments would jump by £179 at the least . I really don’t want to be increasing by this with Christmas round the corner but am worried if I do nothing the situation will be much worse. I asked the Santander advisor would there be a possibility of an extension in July to the rate she said probably not at 2.79 but she was unsure as it is quite a while away. I really don’t know what to do . My partner thinks we should let it be and risk it but I’m terrified we could see our repayments double . What does everyone think should I fix now before it’s too late ? 

CSL0183

pippinpom said:

Hello
I currently have a 167,500 mortgage with 17 yrs left . I am on a fixed rate of 2.79 with Santander this ends on 4th July next year. After yesterdays news I am petrified as to what is going to happen . I rang Santander and discussed my options they said I could go onto a fixed rate of 4.09 and a £999 fee which will be added onto my mortgage as I haven’t got the money upfront or a rate of 4.19 and no fee. My payments would jump by £179 at the least . I really don’t want to be increasing by this with Christmas round the corner but am worried if I do nothing the situation will be much worse. I asked the Santander advisor would there be a possibility of an extension in July to the rate she said probably not at 2.79 but she was unsure as it is quite a while away. I really don’t know what to do . My partner thinks we should let it be and risk it but I’m terrified we could see our repayments double . What does everyone think should I fix now before it’s too late ? 

Divorce your partner. 

Financial experts are predicting BOE BR to be 6% in the summer of 2023 which will mean mortgage rates in the 7.5-8.5 regions when you come to renew. 

Your mortgage will then likely cripple you. I would take the fee free 4.19 rate as opposed to the £999 fee. 

You will likely incur a 1% ERC penalty if you remortgage now though so you have to take everything into consideration. (£1,675) plus the differences in the monthlies. Altho if you manage to lock in a rate now you can try keep the old rate for as long as you can to expiry and then switch just before it expires. 

pippinpom

Santander never mentioned any other fee to me other than the £999. Ours was only a one year fix so maybe that’s why its low

tony3619

If you pay the ERC can you run your existing fixed rate down or will it end and the new rate takeover straight away?

CSL0183

Looking at the mortgage rate calculators

167,500 @ 2.79 over 17 yrs = £1032
167,500 @ 4.19 over 17 yrs = £1149
167,500 @ 7.0 over 17yrs = £1406
167,500 @ 8.0 over 17 yrs = £1505

The figures will be slightly off as it presumes a new 17yr mortgage starting today rather than when you started your current mortgage. However, what it does show is that yes in the case of the above you would be £117pm worse off but if you leave it, you could potentially be £4-500 worse off pm.

Also factor in your ERC which presumably is at 1% so around £1675 penalty.

The experts are predicting a peak of 6% so it’s up to you whether you ignore this or you do something about it. Your current mortgage is finishing at probably the worst possible time.

There is no such thing as a mortgage extension keeping your old rate. Your current fixed rate ends and then you switch to a new deal at the current market rates at the time. 

jj_43

CSL0183 said:

pippinpom said:

Hello
I currently have a 167,500 mortgage with 17 yrs left . I am on a fixed rate of 2.79 with Santander this ends on 4th July next year. After yesterdays news I am petrified as to what is going to happen . I rang Santander and discussed my options they said I could go onto a fixed rate of 4.09 and a £999 fee which will be added onto my mortgage as I haven’t got the money upfront or a rate of 4.19 and no fee. My payments would jump by £179 at the least . I really don’t want to be increasing by this with Christmas round the corner but am worried if I do nothing the situation will be much worse. I asked the Santander advisor would there be a possibility of an extension in July to the rate she said probably not at 2.79 but she was unsure as it is quite a while away. I really don’t know what to do . My partner thinks we should let it be and risk it but I’m terrified we could see our repayments double . What does everyone think should I fix now before it’s too late ? 

Divorce your partner. 

Financial experts are predicting BOE BR to be 6% in the summer of 2023 which will mean mortgage rates in the 7.5-8.5 regions when you come to renew. 

Your mortgage will then likely cripple you. I would take the fee free 4.19 rate as opposed to the £999 fee. 

You will likely incur a 1% ERC penalty if you remortgage now though so you have to take everything into consideration. (£1,675) plus the differences in the monthlies. Altho if you manage to lock in a rate now you can try keep the old rate for as long as you can to expiry and then switch just before it expires. 

doesn't mean that BOE BR are going to be 6% for 5 years.

rates don't peak for long.

keep and listen to your partner

tony3619

If you pay the ERC can you run your existing fix down or will the new rate take over straight away? 

CSL0183

jj_43 said:

CSL0183 said:

pippinpom said:

Hello
I currently have a 167,500 mortgage with 17 yrs left . I am on a fixed rate of 2.79 with Santander this ends on 4th July next year. After yesterdays news I am petrified as to what is going to happen . I rang Santander and discussed my options they said I could go onto a fixed rate of 4.09 and a £999 fee which will be added onto my mortgage as I haven’t got the money upfront or a rate of 4.19 and no fee. My payments would jump by £179 at the least . I really don’t want to be increasing by this with Christmas round the corner but am worried if I do nothing the situation will be much worse. I asked the Santander advisor would there be a possibility of an extension in July to the rate she said probably not at 2.79 but she was unsure as it is quite a while away. I really don’t know what to do . My partner thinks we should let it be and risk it but I’m terrified we could see our repayments double . What does everyone think should I fix now before it’s too late ? 

Divorce your partner. 

Financial experts are predicting BOE BR to be 6% in the summer of 2023 which will mean mortgage rates in the 7.5-8.5 regions when you come to renew. 

Your mortgage will then likely cripple you. I would take the fee free 4.19 rate as opposed to the £999 fee. 

You will likely incur a 1% ERC penalty if you remortgage now though so you have to take everything into consideration. (£1,675) plus the differences in the monthlies. Altho if you manage to lock in a rate now you can try keep the old rate for as long as you can to expiry and then switch just before it expires. 

doesn't mean that BOE BR are going to be 6% for 5 years.

rates don't peak for long.

keep and listen to your partner

What do you suggest they do then? Go onto an SVR of 9-10% and hope and pray they eventually come down? 

Their fix is coming to end at the worst possible time when rates are predicted (By the experts, not me) to be at their highest rates. You could always try and fix for 3yrs as opposed to 5 which would hedge this a little. (Expecting them to come down)

Risky going onto an SVR or being forced onto a 2yr 8% fixed rate mortgage when they have an opportunity now to fix at 4.1%