To fix or not to fix?

Lewis7498

Hello,

So I desperately need some advice as things have taken a turn in the last couple of days for me.

I have a Halifax mortgage which is finished Apr 2023 at 2.09% (£86,000 left on mortgage) so I had a broker find me a ‘reserve’ as a back up in case things get worse with rates.

They recommended HSBC at 5.64% fixed for 5 years… have started the process for an offer but today spoke with Halifax direct and been offered a 3 year fix at 3.69% BUT an ERC of £1297 to do this new fix early.

Obviously that’s a great deal in current times and works out cheapest to stay with Halifax but just wanted your opinions on paying the ERC to do this new fix 6 months early and ditching the 2.09% rate to secure a 3.69%??

lmitchell

Is the ERC costing more than the amount saved from taking 3.69% over 5.64%? It really is that simple...

ariarnia

you have to pay your broker. but do you also have a fee on that morgage or is it free? and any other costs? 

then the sums would be the difference in payments/interest over the three years plus the costs of a remortgage vs a product switch. then add in what its worth to you to have a longer fix (do you think 3 years is long enough for the market to have come back down or gotten worse?)

Lewis7498

lmitchell said:

Is the ERC costing more than the amount saved from taking 3.69% over 5.64%? It really is that simple...

@lmitchell No even with the ERC added on monthly it still works out less than HSBC rate so I guess that’s my answer? 😆

Lewis7498

ariarnia said:

you have to pay your broker. but do you also have a fee on that morgage or is it free? and any other costs? 

then the sums would be the difference in payments/interest over the three years plus the costs of a remortgage vs a product switch. then add in what its worth to you to have a longer fix (do you think 3 years is long enough for the market to have come back down or gotten worse?)

@ariarnia there isn’t a broker fee and the both mortgages are fee free (both the comparisons HSBC and Halifax) it’s just that pesky ERC.

The rate goes up to 4.45% for a 5 year fix. The sums of repayments work out cheaper overall even with the ERC to stay with Halifax by about £44 a month. Would you fix for 5? I worry that the rates will come right down and I’m fixed in for too long?

ariarnia

we recently paid about 800 quid to halifax to fix at 3.5% but ours was for 5 years (was a few months ago) and what is right for us might not be right for you.  

i put the numbers in here to see how much the higher interest rates actually cost over the three years. it looks like the 5% deal would cost you about £3k. but you should check those numbers for yourself. 

https://www.moneysavingexpert.com/mortgages/compare-mortgage-rates/

if thats right then it means the 3 year fix and early redemption would save you about £1800 over three years. the decision about where the markets will be at that point is one only you can make. 

MFWannabe

Lewis7498 said:

ariarnia said:

you have to pay your broker. but do you also have a fee on that morgage or is it free? and any other costs? 

then the sums would be the difference in payments/interest over the three years plus the costs of a remortgage vs a product switch. then add in what its worth to you to have a longer fix (do you think 3 years is long enough for the market to have come back down or gotten worse?)

@ariarnia there isn’t a broker fee and the both mortgages are fee free (both the comparisons HSBC and Halifax) it’s just that pesky ERC.

The rate goes up to 4.45% for a 5 year fix. The sums of repayments work out cheaper overall even with the ERC to stay with Halifax by about £44 a month. Would you fix for 5? I worry that the rates will come right down and I’m fixed in for too long?

It’s a gamble but sounds like you’re worried it’s too much of a gamble 

The 3 year rate is a really good rate and a decent length of time to fix for imo 

Lewis7498

MFWannabe said:

Lewis7498 said:

ariarnia said:

you have to pay your broker. but do you also have a fee on that morgage or is it free? and any other costs? 

then the sums would be the difference in payments/interest over the three years plus the costs of a remortgage vs a product switch. then add in what its worth to you to have a longer fix (do you think 3 years is long enough for the market to have come back down or gotten worse?)

@ariarnia there isn’t a broker fee and the both mortgages are fee free (both the comparisons HSBC and Halifax) it’s just that pesky ERC.

The rate goes up to 4.45% for a 5 year fix. The sums of repayments work out cheaper overall even with the ERC to stay with Halifax by about £44 a month. Would you fix for 5? I worry that the rates will come right down and I’m fixed in for too long?

It’s a gamble but sounds like you’re worried it’s too much of a gamble 

The 3 year rate is a really good rate and a decent length of time to fix for imo 

I think my only worry is that paying the ERC makes it not worth it but I’m pretty sure overall it is? I sometimes need others to help validate my decision so I don’t overthink it 😆

Would you personally go for the 3 year at 3.69% or 5 year at 4.45?

london21

The Halifax rate is rather good.

If they have a decent 5 years rate or lock the 3 years before it ends.

The 3.69% is there a product fee to pay?

Lewis7498 said:

Hello,

So I desperately need some advice as things have taken a turn in the last couple of days for me.

I have a Halifax mortgage which is finished Apr 2023 at 2.09% (£86,000 left on mortgage) so I had a broker find me a ‘reserve’ as a back up in case things get worse with rates.

They recommended HSBC at 5.64% fixed for 5 years… have started the process for an offer but today spoke with Halifax direct and been offered a 3 year fix at 3.69% BUT an ERC of £1297 to do this new fix early.

Obviously that’s a great deal in current times and works out cheapest to stay with Halifax but just wanted your opinions on paying the ERC to do this new fix 6 months early and ditching the 2.09% rate to secure a 3.69%??

Lewis7498

london21 said:

The Halifax rate is rather good.

If they have a decent 5 years rate or lock the 3 years before it ends.

The 3.69% is there a product fee to pay?

Lewis7498 said:

Hello,

So I desperately need some advice as things have taken a turn in the last couple of days for me.

I have a Halifax mortgage which is finished Apr 2023 at 2.09% (£86,000 left on mortgage) so I had a broker find me a ‘reserve’ as a back up in case things get worse with rates.

They recommended HSBC at 5.64% fixed for 5 years… have started the process for an offer but today spoke with Halifax direct and been offered a 3 year fix at 3.69% BUT an ERC of £1297 to do this new fix early.

Obviously that’s a great deal in current times and works out cheapest to stay with Halifax but just wanted your opinions on paying the ERC to do this new fix 6 months early and ditching the 2.09% rate to secure a 3.69%??

It is good, it’s 3.69% for 3 years (but actually finishes 31/1/26 so just over 3 years) or 4.45% for 5 years.

Both have no product fee but I obviously have to pay my ERC to change 6 months early unfortunately.

Still worth it in my opinion 🙂

etherealho

Is it just with direct by calling Halifax and discussing product transfer?