Remortage or not, fix or tracker

Peco141

My x2 year fixed mortgage with the Co-op end 31st March 2023.

Ideally I would like to remain on or a 2 or 3 year fix.

From what I understand, my monthly payments will increase from £355 to around £460 with the only option available at the moment of a x5 year fixed.

However, much of the news seems to be suggesting that the Base rate and mortgage rates will come down in the next few months.

In order to get onto a secure short term fixed rate and at the cheapest possible price, should I stay on the standard variable rate and pay a little more initially as a result in the hope that the SVR does decrease, and how long does it roughly take for an application of a new deal to be applied for and processed?

NannaH

How about a tracker?  Surely that’s cheaper than SVR? 

Peco141

Not really.  The only Tracker available at Co-Op:

Lifetime Tracker

Early repayment charges do not apply to our Lifetime Tracker mortgages, so you can overpay with no restrictions.

Monthly payment

£469.35

Current rate

5.49%

Product fee

£999.00

Loan to value

LTV 60%

Cost for comparison

5.9% APRC

Having said that, 2 and 3 year fixes have suddenly appeared that weren't available before.  Below is one without a product fee.

2 Year Fixed Rate

Early repayment charge of 2% of the amount redeemed in year 1 and 1% in year 2

Monthly payment

£462.07

Initial rate

5.25%

Product fee

£0.00

Loan to value

LTV 60%

Cost for comparison

5.9% APRC

I think I'll sit tight to see what January/February brings. If the interest rates drop, it means I'll probably have only maybe one or two months (hopefully) at the standard variable rate of (currently 5.87).

That will sting for a month or two, but I think it might be the best option in the hope I can get a better deal in March/April and be "closer" to what I'm currently paying. 

I've no real clue if this is a good move or not right enough.

Khaderbhai

Do you need to stay with the Co-op? There are better deals out there. It’s a punt that rates will drop, a lot of the commentary suggests rates will continue to increase in the short term, so would it *could* be wise to grab a deal on the market over 2 years now.

Peco141

I guess this is the unknown and why we post on here.  Hopefully that someone in the know or with better understanding on what is likely to provide insight.

I'd be gutted to tie into a fix at 5.25% just now if come May, June, July the rates were to drop back down to what I'm paying right now.  It could save me a fortune. 

We're all in the same boat though.

housebuyer143

Leave the co-op and go elsewhere? There are plenty of trackers at 0.35% above base. Look for one with no ERCs and then you can fix if you find a good one later on.

I have only seen svrs go up in the last year, not down. So you might end up paying more by staying on it.

Peco141

housebuyer143 said:

Leave the co-op and go elsewhere? There are plenty of trackers at 0.35% above base. Look for one with no ERCs and then you can fix if you find a good one later on.

I have only seen svrs go up in the last year, not down. So you might end up paying more by staying on it.

I hadn't thought of doing this.  Thanks very much.

Peco141

My mortgage company just called and provided another option which may benefit others which is to temporarily increase the term and pay less while on a tracker, I think he said lifetime tracker, and wait to see if interest payments drop before moving.

Peco141

housebuyer143 said:

Leave the co-op and go elsewhere? There are plenty of trackers at 0.35% above base. Look for one with no ERCs and then you can fix if you find a good one later on.

I have only seen svrs go up in the last year, not down. So you might end up paying more by staying on it.

Is it a lifetime tracker that I should be looking at?  Mortgage advisor suggested so but I'm googling this and cannot get a clear answer.

Peco141

housebuyer143 said:

Leave the co-op and go elsewhere? There are plenty of trackers at 0.35% above base. Look for one with no ERCs and then you can fix if you find a good one later on.

I have only seen svrs go up in the last year, not down. So you might end up paying more by staying on it.

I assumed a tracker was the SVR no?   So are you saying when my terms ends at end of March I'll go onto the SVR which is higher than a tracker?

Matt_OX4

SVR is usually at least 3% higher than a tracker rate - do everything you can to avoid going on to the SVR. Speak to a broker to get advice, there are plenty of no fee ones. Would also avoid extending the term if possible - yes, your monthly payments will be lower but you'll have paid much more by the time you are mortgage free.