Urgent advice needed - Remortgage

SCHAM

Hello,

Admittedly I've been a bit slack on remortgaging. It's my first remortgage, after taking out my first 5 years ago on 2.44%.

Received a letter through saying my payments are going from £1053 per month to £1679 per month. Took out on a 30 year term, 5 year fix.

So obviously need to come up with a solution ASAP.

House value is likely £400k now, and £238k left to pay.

Does anyone have any advice?

Would it be wise to extend the mortgage length, to 35 years or even 40 - but only do this for a 2 year fix.

Then I can hope interest rates have sorted themselves out in 2 year time and revert back to 23 years, or 25 years as an example.

Hope that makes sense - feel free to ask for any more info.

kingstreet

Establish your lender's customer retention options - these are new special offers for existing customers.

Establish remortgage options - this means a new mortgage with a new lender to replace the current one.

housebuyer143

I doubt hugely that rates are going back to 2.4% so you need to consider if you can afford this house long term. 
If you can do extend the term then you should be able to as long as your affordability is there. You can always do a product switch which is easiest or a full remortgage if you're current lender no longer works for you 

simon_or

As Longstreet said, check what your options are. Also check how far you can stretch the mortgage term to get a comfortable payment level. I always get my broker to get me a term that goes to 80 years old based on my current income even if it's not the cheapest bank, that really helps with flexibility and I still overpay.

You can always overpay if you want to effectively reduce term but no lender is going to allow you to underpay if you get into difficulty.

K_S

@SCHAM It would've been better if you'd explored options a few months ago, but don't stress too much as your situation isn't as bad as it might seem at first glance, assuming that you're with a mainstream lender.

The £1,679 is probably assuming you don't do anything and fall on to the lender's SVR, so you can safely ignore that.

If you're with a mainstream lender, at <60% LTV, you probably have access to a 5 year fix rate between 4-4.5%. With no change in term, assuming a midpoint rate of 4.3% and a loan size of 238k, you'd have 25 years left on the term and that would give you a monthly payment of around £1,300, only £250 more than your current payment.

If you are young enough, in a desk-based role and with a lender that allows you to stretch the term to 35/40 years, that monthly payment falls to  £1,050-1,100, so very close to what you're paying now.

If a low monthly payment and flexibility are important to you, I wouldn't worry too much about a longer term as you have the power to manually overpay and achieve the same outcome as if you were on a shorter term, but with the added flexibility of stopping overpayments if you wished to. Plenty of my clients buying and re-mortgaging this year are taking this route.
https://blog.moneysavingexpert.com/2014/10/dont-shorten-your-mortgage-term-if-you-can-overpay/

Don't delay, see what options are available to you, make a decision and lock in a rate sooner rather than later (lenders are currently upping their existing-customer rates), good luck!

SCHAM said:

Hello,

Admittedly I've been a bit slack on remortgaging. It's my first remortgage, after taking out my first 5 years ago on 2.44%.

Received a letter through saying my payments are going from £1053 per month to £1679 per month. Took out on a 30 year term, 5 year fix.

So obviously need to come up with a solution ASAP.

House value is likely £400k now, and £238k left to pay.

Does anyone have any advice?

Would it be wise to extend the mortgage length, to 35 years or even 40 - but only do this for a 2 year fix.

Then I can hope interest rates have sorted themselves out in 2 year time and revert back to 23 years, or 25 years as an example.

Hope that makes sense - feel free to ask for any more info.

SCHAM

Thanks for the advice all - very much appreciate it.

I'm with HSBC for reference. I'll call them tomorrow with a view to exploring lengthening my term and overpaying in order to have greater flexibility.

Leaning towards a 2 year fix and evaluating the situation in 2025 - hoping rates have come down by then.