Will mortgage rates increase or stabilize/ should we make this house move?!

GalaxyGirl90

A dream house has come onto Rightmove, forever house material, We have joint income of £3700 monthly.

If we sell our house for £290,000, have deposit of £135,000, the house we would like is £465,000. We currently have £144,000 with Nationwide at 1.89% until November 2024 for monthly payments of £550.00, 28 years remaining and borrowing extra £190,000 at say 4.5 % over 35 years would be an additional £900 so monthly payments totaling £1450.00. Am aware November 2024 it would increase further when 1.89% expires on that part. 

I know no one has a crystal ball, but what are opinions- are mortgage rates going to stabilize? Are they going to rise even further?

Should we fix, should we track?
Is mortgage of £1450 insane?!  (South West, I know people renting for £1200). I work part time so could increase to 5 day week for extra £350 a month if needed.

 At the moment having worked out our incomings and outgoings, we could afford a mortgage of £1500.00 with £1000 pm left between us after paying all necessary food and bills. That £1000 would cover any potential new car/holidays which I feel is doable. (especially if I increased my earning by £350 pm) We are not extravagant people are very much home bodies. 

20vt-rs

Sounds doable, a stretch but hopefully a short term thing, but given it's a potential stretch, I'd be fixing - But some things to consider in your budgeting:
1. Increase of council tax on a larger property, check the new home against yours now.
2. Increase of heating / energy use in a larger home.
3. Any remediation work you'd like / need to do once moved in.
4. Moving costs, especially stamp duty, that is a large chunk of moving, plus estate agent fees to sell. There are calculators online to check this out. 
Just make sure you have all of this considered and included in your budgeting equity for the next one, does that make the deposit less and increase the mortgage needed? How secure your jobs are is also a factor. 
Overall, I think short term stretch will pay off, because longer term in general, things do get easier. Good luck!

GalaxyGirl90

@20vt-rs
thank you for your helpful post. 

1) Council tax band is one up/below, making payments £20 more.
2) Equal size home (3 bed) bar new house has a conservatory and out garage. The increase in price is due to much much better area + outside space (large driveway and garden) 
3) Happy to live in it as is for a few years.
4) Already taken into account with equity amount. We will have £150,000 equity but have minused roughly £15k for Stamp Duty/Moving costs. I work in a Solicitors so will get conveyancing disbursements only. 

Thank you for your encouraging words! 

mi-key

Rates seem to have stabilised, so barring any great disasters, they will probably stay around the level they are for the next 5 years. Interest rates probably aren't going to rise by much, or drop back to what they were before for a good while, so a long term fix would be a good plan.

Speak to a broker and give them your figures and see how the affordability for borrowing works out

GalaxyGirl90

Oh and to cover the point, we already have a child of school age with no plans for anymore, and we are late 20's early 30s'   

TheJP

GalaxyGirl90 said:

A dream house has come onto Rightmove, forever house material, We have joint income of £3700 monthly.

If we sell our house for £290,000, have deposit of £135,000, the house we would like is £465,000. We currently have £144,000 with Nationwide at 1.89% until November 2024 for monthly payments of £550.00, 28 years remaining and borrowing extra £190,000 at say 4.5 % over 35 years would be an additional £900 so monthly payments totaling £1450.00. Am aware November 2024 it would increase further when 1.89% expires on that part. 

I know no one has a crystal ball, but what are opinions- are mortgage rates going to stabilize? Are they going to rise even further?

Should we fix, should we track?
Is mortgage of £1450 insane?!  (South West, I know people renting for £1200). I work part time so could increase to 5 day week for extra £350 a month if needed.

 At the moment having worked out our incomings and outgoings, we could afford a mortgage of £1500.00 with £1000 pm left between us after paying all necessary food and bills. That £1000 would cover any potential new car/holidays which I feel is doable. (especially if I increased my earning by £350 pm) We are not extravagant people are very much home bodies. 

Have you checked that you can port your existing mortgage to a new property? If not then it would need to be a new product at much higher rates plus an early repayment charges that may be attached to your existing product.

GalaxyGirl90

Yes it is portable  

FrugalCat

mi-key said:

Rates seem to have stabilised, so barring any great disasters, they will probably stay around the level they are for the next 5 years. Interest rates probably aren't going to rise by much, or drop back to what they were before for a good while, so a long term fix would be a good plan.

Whatever compelled this statement, ignore it. The governor of the Bank of England couldn't make this assumption with any reasonable degree of certainty.

To answer your question: Only you can work out how much you can afford to risk.

Go through some scenarios. What if... your mortgage is X% more? you lose your job? someone becomes long term sick/ dies? 

Work out where your limits of affordability are & what would stretch you beyond the limit. And then decide if you're willing to take the risk or not, based on how likely it is (or perhaps decide to negate the risk via insurance?).

Whatever happens, it's your responsibility to make the decision and live with the consequences.

GalaxyGirl90

That's a fair point re illness @FrugalCat, I suppose the answer would be to downsize again and hope because the house is in a much better area it holds the majority of its value/doesn't become completely unsellable. 
Death = life insurance.

RelievedSheff

Have you tried your lenders online affordability calculator's to check that they would lend you the additional amount that you need?

We recently looked into a similar sounding move to a "forever" home with from a house valued at around £280k to a house priced at £360k and despite having a lot of equity in our current property (£100k) and a joint monthly income of £4.5k we were falling short on affordability.

Sarah1Mitty2

mi-key said:

Rates seem to have stabilised, so barring any great disasters, they will probably stay around the level they are for the next 5 years. Interest rates probably aren't going to rise by much, or drop back to what they were before for a good while, so a long term fix would be a good plan.

Speak to a broker and give them your figures and see how the affordability for borrowing works out

Very unlikely that this can be predicted with any degree of accuracy to be honest, but if the OP still has a house to sell they are jumping too many steps ahead at the moment anyway.