Confused with when to act!

Croftys

Hi all, can someone help me understand a query my wife has had with our mortgage? 

We have £48,000 on 2.18% ending in March next year. We are able to accept an ERC of £431.13 and lock into a rate of 4.74% today, that’s 3 years.

 My understanding is that the difference of the extra per month plus the 8 months lost from now till March next year, is the cost to weigh against waiting till March and seeing what the rates are? She’s of the opinion that rates will only go up, and 4.74 is better than 2+ years at 6%!

Please help!

K_S

@croftys Impossible to say what will turn out best in the end but with a relatively small mortgage you're unlikely to be overly worse off whatever you choose to do.

If you want to retain your optionality then might be worth applying for a re-mortgage offer from one of the mainstream lenders that offer 3 or 6 month extensions on top of their 6 month re-mortgage offers like Platform, Leeds, Skipton, etc. so you can lock in a rate and wait and watch rather than pay a 1% ERC and lose the remaining months on a 2% rate.

Croftys said:

Hi all, can someone help me understand a query my wife has had with our mortgage? 

We have £48,000 on 2.18% ending in March next year. We are able to accept an ERC of £431.13 and lock into a rate of 4.74% today, that’s 3 years.

 My understanding is that the difference of the extra per month plus the 8 months lost from now till March next year, is the cost to weigh against waiting till March and seeing what the rates are? She’s of the opinion that rates will only go up, and 4.74 is better than 2+ years at 6%!

Please help!

Croftys

I understand K_S. There is one issue, the mortgage is a second charge, and we have to stick with Nationwide! Our primary mortgage is sat at 2.5% for another 5 years. Combined they are 152k. I think I should crunch all the numbers, under each scenario and work out the risk vs reward either way. My primary aim is to overpay this at its maximum each year to get the majority paid before the other is up for a new rate. Applying 6%+ to 152 is scary 🤣

dimbo61

So if you can overpay the smaller part of the mortgage.
Having said that you might get a 4/5% regular saver  account until March 

jcrennie

K_S said:

@croftys Impossible to say what will turn out best in the end but with a relatively small mortgage you're unlikely to be overly worse off whatever you choose to do.

If you want to retain your optionality then might be worth applying for a re-mortgage offer from one of the mainstream lenders that offer 3 or 6 month extensions on top of their 6 month re-mortgage offers like Platform, Leeds, Skipton, etc. so you can lock in a rate and wait and watch rather than pay a 1% ERC and lose the remaining months on a 2% rate.

Croftys said:

Hi all, can someone help me understand a query my wife has had with our mortgage? 

We have £48,000 on 2.18% ending in March next year. We are able to accept an ERC of £431.13 and lock into a rate of 4.74% today, that’s 3 years.

 My understanding is that the difference of the extra per month plus the 8 months lost from now till March next year, is the cost to weigh against waiting till March and seeing what the rates are? She’s of the opinion that rates will only go up, and 4.74 is better than 2+ years at 6%!

Please help!

I am in a really similar position to the OP. My 1.54% fix with Nationwide ends in Dec 2023. I'm coming off a 2 year fix as a FTB so I've never done re-mortgaged or moved products. How does it work with applying for a re-mortgage product and then keeping your options open? I think I'd like to lock something in now so that I can budget for that, at the same time as rolling the dice to see where rates are in 6 months. I kind of prescribe to the doom and gloom scenario at the moment, but things can always change fast.

Suspect my property has gone up in value too (live in an area where there's always high demand for housing), which might move my LTV from 80% to 75%.

K_S

@jcrennie I can't speak for your case specifically, but generally speaking if a borrower wanted to lock in a rate more than 6 months prior to end of your fix, there are a few different ways to do it - using a lender that allows you to 'reserve' at product (eg: Nationwide, but this option won't be available for someone already with Nationwide) without putting in a full application, or one that allows you to extend the 6 month mortgage offer (eg: Platform allows a 3 month extension on top of 6 months validity), etc.

jcrennie said:

K_S said:

@croftys Impossible to say what will turn out best in the end but with a relatively small mortgage you're unlikely to be overly worse off whatever you choose to do.

If you want to retain your optionality then might be worth applying for a re-mortgage offer from one of the mainstream lenders that offer 3 or 6 month extensions on top of their 6 month re-mortgage offers like Platform, Leeds, Skipton, etc. so you can lock in a rate and wait and watch rather than pay a 1% ERC and lose the remaining months on a 2% rate.

Croftys said:

Hi all, can someone help me understand a query my wife has had with our mortgage? 

We have £48,000 on 2.18% ending in March next year. We are able to accept an ERC of £431.13 and lock into a rate of 4.74% today, that’s 3 years.

 My understanding is that the difference of the extra per month plus the 8 months lost from now till March next year, is the cost to weigh against waiting till March and seeing what the rates are? She’s of the opinion that rates will only go up, and 4.74 is better than 2+ years at 6%!

Please help!

I am in a really similar position to the OP. My 1.54% fix with Nationwide ends in Dec 2023. I'm coming off a 2 year fix as a FTB so I've never done re-mortgaged or moved products. How does it work with applying for a re-mortgage product and then keeping your options open? I think I'd like to lock something in now so that I can budget for that, at the same time as rolling the dice to see where rates are in 6 months. I kind of prescribe to the doom and gloom scenario at the moment, but things can always change fast.

Suspect my property has gone up in value too (live in an area where there's always high demand for housing), which might move my LTV from 80% to 75%.

jcrennie

K_S said:

@jcrennie I can't speak for your case specifically, but generally speaking if a borrower wanted to lock in a rate more than 6 months prior to end of your fix, there are a few different ways to do it - using a lender that allows you to 'reserve' at product (eg: Nationwide, but this option won't be available for someone already with Nationwide) without putting in a full application, or one that allows you to extend the 6 month mortgage offer (eg: Platform allows a 3 month extension on top of 6 months validity), etc.

jcrennie said:

K_S said:

@croftys Impossible to say what will turn out best in the end but with a relatively small mortgage you're unlikely to be overly worse off whatever you choose to do.

If you want to retain your optionality then might be worth applying for a re-mortgage offer from one of the mainstream lenders that offer 3 or 6 month extensions on top of their 6 month re-mortgage offers like Platform, Leeds, Skipton, etc. so you can lock in a rate and wait and watch rather than pay a 1% ERC and lose the remaining months on a 2% rate.

Croftys said:

Hi all, can someone help me understand a query my wife has had with our mortgage? 

We have £48,000 on 2.18% ending in March next year. We are able to accept an ERC of £431.13 and lock into a rate of 4.74% today, that’s 3 years.

 My understanding is that the difference of the extra per month plus the 8 months lost from now till March next year, is the cost to weigh against waiting till March and seeing what the rates are? She’s of the opinion that rates will only go up, and 4.74 is better than 2+ years at 6%!

Please help!

I am in a really similar position to the OP. My 1.54% fix with Nationwide ends in Dec 2023. I'm coming off a 2 year fix as a FTB so I've never done re-mortgaged or moved products. How does it work with applying for a re-mortgage product and then keeping your options open? I think I'd like to lock something in now so that I can budget for that, at the same time as rolling the dice to see where rates are in 6 months. I kind of prescribe to the doom and gloom scenario at the moment, but things can always change fast.

Suspect my property has gone up in value too (live in an area where there's always high demand for housing), which might move my LTV from 80% to 75%.

Thanks, appreciate the reply - I think I'll go through a broker in that case and tell them my situation. My fix ends 31/12. I'm lucky that I can swallow 5%ish and still be fine, but much higher than that and it will really cut so I'd rather air with the side of caution & plan for worst case scenario, whilst hoping rates improve.

born_again

jcrennie said:

K_S said:

@jcrennie I can't speak for your case specifically, but generally speaking if a borrower wanted to lock in a rate more than 6 months prior to end of your fix, there are a few different ways to do it - using a lender that allows you to 'reserve' at product (eg: Nationwide, but this option won't be available for someone already with Nationwide) without putting in a full application, or one that allows you to extend the 6 month mortgage offer (eg: Platform allows a 3 month extension on top of 6 months validity), etc.

jcrennie said:

K_S said:

@croftys Impossible to say what will turn out best in the end but with a relatively small mortgage you're unlikely to be overly worse off whatever you choose to do.

If you want to retain your optionality then might be worth applying for a re-mortgage offer from one of the mainstream lenders that offer 3 or 6 month extensions on top of their 6 month re-mortgage offers like Platform, Leeds, Skipton, etc. so you can lock in a rate and wait and watch rather than pay a 1% ERC and lose the remaining months on a 2% rate.

Croftys said:

Hi all, can someone help me understand a query my wife has had with our mortgage? 

We have £48,000 on 2.18% ending in March next year. We are able to accept an ERC of £431.13 and lock into a rate of 4.74% today, that’s 3 years.

 My understanding is that the difference of the extra per month plus the 8 months lost from now till March next year, is the cost to weigh against waiting till March and seeing what the rates are? She’s of the opinion that rates will only go up, and 4.74 is better than 2+ years at 6%!

Please help!

I am in a really similar position to the OP. My 1.54% fix with Nationwide ends in Dec 2023. I'm coming off a 2 year fix as a FTB so I've never done re-mortgaged or moved products. How does it work with applying for a re-mortgage product and then keeping your options open? I think I'd like to lock something in now so that I can budget for that, at the same time as rolling the dice to see where rates are in 6 months. I kind of prescribe to the doom and gloom scenario at the moment, but things can always change fast.

Suspect my property has gone up in value too (live in an area where there's always high demand for housing), which might move my LTV from 80% to 75%.

Thanks, appreciate the reply - I think I'll go through a broker in that case and tell them my situation. My fix ends 31/12. I'm lucky that I can swallow 5%ish and still be fine, but much higher than that and it will really cut so I'd rather air with the side of caution & plan for worst case scenario, whilst hoping rates improve.

Speak to your current lender & see what offers they have. If they have one you like, then they are done with no financial assessment.
I did ours in Jan/Feb which was 6 months before it ends in July & got the same rate as I had for a further 5 years.
Sadly not something I would expect for you on such a low rate though.

jcrennie

born_again said:

Speak to your current lender & see what offers they have. If they have one you like, then they are done with no financial assessment.
I did ours in Jan/Feb which was 6 months before it ends in July & got the same rate as I had for a further 5 years.
Sadly not something I would expect for you on such a low rate though.

Thanks. Would this be the same where I can reserve a product? I know I've no chance of a rate that low, I think anything under 5% is going to be utopia.