Should we get a longer fixed rate?

boywizzard

Hi all,

We currently have a 2 year fixed rate with NSBC at 1.59%, which runs until April 2024. with everything that is going on at the moment i am starting to wonder if it might be worth going for a longer term fix to guarantee payments. currently the HSBC's offer is 5.01% for 5 years which is a massive increase but it looks like it might get worse before it gets better.

The issue that we have is that my wife has been out of work on long term sick for some time, so we are not able to move at all and have to stay with HSBC, so we are stuck with that rate or crossing fingers and praying at the moment!

FYI I know that we will have to pay the ERC as well and would have to factor this in but i am a lot more interested in the monthly commitment than i am one off fees currently, as we are trying to plan for the future if possible.

does anyone have any advice to offer? we have approached a broker but they are obviously reticent to give advice that might leave them open to legal action if anything goes wrong based on what they have said! (understandable at the moment) for the avoidance of doubt i am not about to try and sue anyone on the forum for offering well meaning advice and you can take that as written confirmation if you wish!

Many thanks,

Alex 

K_S

@boywizzard Unless it's a broker you've been working with previously, I can see why they would be reluctant to give firm advice on this.

One huge positive is that being with HSBC, you don't have to worry too much about the ERC as it is pro-rated. And HSBC will allow you to delay a PT for 120 days, so if you applied for a PT today, you could have it kick in in late Jan, and the ERC due would be 3/12th of 1% i.e. 0.25% of your outstanding amount.

So essentially it boils down to 2 questions -

1. Is 0.25% ERC something that you would consider paying
2. How much you value the security of locking in at 5.01% for 5 years vs being unable to take advantage if rates are significantly less in 2-3 years time

Hopefully that helps inform your thought-making process.

Edit: Ignore the above, I misread 2024 as 2023. The ERC would be 1.25%, and you'd lose x months on the lower rate as well.

boywizzard said:

Hi all,

We currently have a 2 year fixed rate with NSBC at 1.59%, which runs until April 2024. with everything that is going on at the moment i am starting to wonder if it might be worth going for a longer term fix to guarantee payments. currently the HSBC's offer is 5.01% for 5 years which is a massive increase but it looks like it might get worse before it gets better.

The issue that we have is that my wife has been out of work on long term sick for some time, so we are not able to move at all and have to stay with HSBC, so we are stuck with that rate or crossing fingers and praying at the moment!

FYI I know that we will have to pay the ERC as well and would have to factor this in but i am a lot more interested in the monthly commitment than i am one off fees currently, as we are trying to plan for the future if possible.

does anyone have any advice to offer? we have approached a broker but they are obviously reticent to give advice that might leave them open to legal action if anything goes wrong based on what they have said! (understandable at the moment) for the avoidance of doubt i am not about to try and sue anyone on the forum for offering well meaning advice and you can take that as written confirmation if you wish!

Many thanks,

Alex 

ElwoodBlues

Don't forget you'll lose 18 months of your 1.59% fix. It's a big jump to 5%. You might be better using the next year or so to overpay, and then hope that rates aren't higher by April 2024. If they go much higher than 5% a quarter of the country is going to be homeless, which surely wouldn't be allowed to happen.