Should I switch products now?

ClaraSolis

We currently have a mortgage with First Direct, with our current 5-year rate running out 26 September. We are currently on 2.19%, paying around £742 per month. Because we don't earn that much and have other debts to pay off, we've not really been able to overpay much. We now have around £187,000 left to pay (over 29 years, I think). 

As our current deal is finishing soon, I have been looking at the rates that are available out there. However, as I lost my job in 2021 and registered as self-employed, I don't think I can/should switch to a different provider? I've only submitted one Self-Assessment so far (for 2021-2022), which was lower than what I used to earn when we took out this mortgage deal (£12,500 vs £18,750). I could submit my second Self-Assessment now for 2022-2023, which would be higher (around £26,000). However, I'm not sure if we would easily get accepted for a deal because of my low income during the first year and being self-employed? 

Would we be best to stick with First Direct for now and do a product switch? If so, do we simply wait until our current deal runs out and look to switch then? Are rates likely to go up if the BoE announce another rate rise this week?

I've had a look at the FD rates, and these are the 'best' rates currently available based on the numbers I put in (assuming the house value I gave is accepted):
4.49% 2 Year Fixed Repayment - £962 (no fee)
3.99% 5 Year Fixed Repayment - £908 (no fee)
4.19% 10 Year Fixed Repayment - £929 (no fee)

4.39% 2 Year Fixed Repayment - £951 (£490 fee)
3.89% 5 Year Fixed Repayment  - £897 (£490 fee)
4.04% 10 Year Fixed Repayment - £913 (£490 fee)

The 5 year fixes look like the best deals, but I wonder if prices are likely to drop over the next 2 years?
We had a similar issue last time, where rates dropped ridiculously low after we had just taken out our 5 year deal. 

I've been stressing out a bit about this, as our bills have gone up by so much already. Having our mortgage go up by £200 or more is just going to make everything even harder, so I want to make sure we get the best deal we can get, given our circumstances. I know no one on here can give real financial advice, but I guess I would just like to hear some opinions. It'd be very much appreciated! 

Sorry for the long post! In short:
Do we wait until September to switch, or risk rates going up again?
Do we stick with FD or are we likely to get a deal somewhere else based on my self-employment?

K_S

@clarasolis You're already with a competitive mainstream lender and with only a 1 year SE history, your choice of any other lenders is likely to be quite limited at present. The route of least resistance would be to stick to an FD PT (product switch).

To hedge your bets, you could look at booking in an FD PT now to kick in when the current fix ends so that is secured.

Once you've done your latest tax return and have an SA302 and TYO, you can always reassess (say in mid/late July or so) and see if are any savings to be had by remortgaging away to another lender and whether or not you can borrow what you need if you moved away.

Edit: The above assumes that (like the vast majority of lenders) FD allows you to book a PT with no upfront costs and allows you to cancel a booked PT before completion. I've no clue how FD works as it's a direct only lender.

ClaraSolis said:

We currently have a mortgage with First Direct, with our current 5-year rate running out 26 September. We are currently on 2.19%, paying around £742 per month. Because we don't earn that much and have other debts to pay off, we've not really been able to overpay much. We now have around £187,000 left to pay (over 29 years, I think). 

As our current deal is finishing soon, I have been looking at the rates that are available out there. However, as I lost my job in 2021 and registered as self-employed, I don't think I can/should switch to a different provider? I've only submitted one Self-Assessment so far (for 2021-2022), which was lower than what I used to earn when we took out this mortgage deal (£12,500 vs £18,750). I could submit my second Self-Assessment now for 2022-2023, which would be higher (around £26,000). However, I'm not sure if we would easily get accepted for a deal because of my low income during the first year and being self-employed? 

Would we be best to stick with First Direct for now and do a product switch? If so, do we simply wait until our current deal runs out and look to switch then? Are rates likely to go up if the BoE announce another rate rise this week?

I've had a look at the FD rates, and these are the 'best' rates currently available based on the numbers I put in (assuming the house value I gave is accepted):
4.49% 2 Year Fixed Repayment - £962 (no fee)
3.99% 5 Year Fixed Repayment - £908 (no fee)
4.19% 10 Year Fixed Repayment - £929 (no fee)

4.39% 2 Year Fixed Repayment - £951 (£490 fee)
3.89% 5 Year Fixed Repayment  - £897 (£490 fee)
4.04% 10 Year Fixed Repayment - £913 (£490 fee)

The 5 year fixes look like the best deals, but I wonder if prices are likely to drop over the next 2 years?
We had a similar issue last time, where rates dropped ridiculously low after we had just taken out our 5 year deal. 

I've been stressing out a bit about this, as our bills have gone up by so much already. Having our mortgage go up by £200 or more is just going to make everything even harder, so I want to make sure we get the best deal we can get, given our circumstances. I know no one on here can give real financial advice, but I guess I would just like to hear some opinions. It'd be very much appreciated! 

Sorry for the long post! In short:
Do we wait until September to switch, or risk rates going up again?
Do we stick with FD or are we likely to get a deal somewhere else based on my self-employment?

TheJP

Agree stick with FD, have you considered their tracker? I would be uncomfortable with a fixed over 2 years as i think rates will be much lower in the new year, however anything can happen these days. 

ClaraSolis

TheJP said:

Agree stick with FD, have you considered their tracker? I would be uncomfortable with a fixed over 2 years as i think rates will be much lower in the new year, however anything can happen these days. 

Their tracker would be £1,176 per month at a rate of 6.34%. That's a lot more than we are currently paying, and I think we would struggle with this (as my income isn't guaranteed to be steady, it varies every month).

I've also never used a tracker rate before, so I'm not sure how exactly they work. Can you just leave them at any time?

K_S

@ClaraSolis Most lender trackers have no ERC (early repayment penalty) so you can leave (switch to a fix with the same lender or remortgage to another lender) whenever you want. I'm not certain but I'm pretty confident that FD trackers fall in this bucket.

They go up and down with the Bank Of England interest rate, which is expected to go up by at least 0.25% again later this week.

Having said that, if your income is irregular or you would struggle if the rate went up then a fixed rate is probably what you should consider over any kind of variable rate.

ClaraSolis said:

TheJP said:

Agree stick with FD, have you considered their tracker? I would be uncomfortable with a fixed over 2 years as i think rates will be much lower in the new year, however anything can happen these days. 

Their tracker would be £1,176 per month at a rate of 6.34%. That's a lot more than we are currently paying, and I think we would struggle with this (as my income isn't guaranteed to be steady, it varies every month).

I've also never used a tracker rate before, so I'm not sure how exactly they work. Can you just leave them at any time?