Hedging BOE base rate rise

inigma

Hello,

I am on a 2 year fix at 1.14% due to expire August next year. My outstanding balance is £19k, I am allowed to overpay £13.5k before then.
My wife and I are discussing taking out a loan with Sainsbury's to overpay the £13.5k and have this spread out over 2 years at 4.3% (no early repayment charge if we pay up early) then the mortgage will be dead in August and a smallish loan outstanding.  Looking at the probable rise in interest rates and the fact we wouldn't want to be locked in for 2 years on a 5.75% would having this loan be an effective hedge any rate increase.

Is this a good idea?

South_coast

What happens to the other £5.5k?

edinburgher

Why not just spend on 0% credit cards and pay these off with no interest? Depending on your circumstances, £13.5-19k would be perfectly achievable on cards and you could pay them down over a few years 

inigma

edinburgher said:

Why not just spend on 0% credit cards and pay these off with no interest? Depending on your circumstances, £13.5-19k would be perfectly achievable on cards and you could pay them down over a few years 

Not sure we could spend that much before August, we did look at it as an option but figured if we take a loan we can spread 4.3% over 5 years.  The remaining £5,500 on the mortgage would be cleared in august.  Chances are we could aggressively attack the 4.3% for August too, but it feels like we would have a bit more breathing space.
The nationwide smr is 5.74% and will only go higher.
We were set to be mortgage free last year but life got in the way and we are keen to get rid of it as quickly as we can now. Especially as we are so close to the finish line.