Fixed mortgage ending jan 24, advice?

Parties03

When we recently moved we ported our old rate over and got partially a new deal. The old rate ends next jan, the plan was to re fix in August with the same lender and keep our eyes out for anything better, and accept the ERC on the newer sub mortgage. 

With all the changes recently here are our choices, both 5y fixed :- 

1. Stick with current lender with a new product. They can offer us 4.42 with immediate effect. 

advantage- don’t think this rate is going to be possible otherwise or in the near future.
peace of mind it’s sorted and fixed for 5 years. 

disadvantage - this is liable to a ERC for all sub mortgages which is considerable but affordable. 

If rates do come down between now and Jan we can’t access them as this is a new product rather than fixing before our current ends. 



2. wait until 1st august and see what we can get 
Advantage - ERC is 3.5k lower than option 1 as it’s payable on only the newest sub mortgage.  

Continue paying a slightly lower monthly mortgage until Jan so can save a little more.
IF rates come down  between aug and Jan we could access them. 

Disadvantage - in 6 weeks we won’t get 4.42, if it’s anything higher than 4.78 this option is a loss (accounting for overall costs of the whole mortgage over 5 years for both options, including ERC) 

Option 2 is a huge gamble and I’m heavily leaving to option 1 but appreciate insight. I don’t see rates declining below 4.4… so I feel like if we can get this we just go for it while we can? 

AnnieB2018

It depends on the exact term & amount outstanding….
That said, I am never a fun of paying extra fees up front unnecessary, even if there may be some tiny interest savings in the long term do you really know what inflation will be in the next 5-20 years? A pound today is not the same pound in 2045.

simon_or

Parties03 said:

Option 2 is a huge gamble and I’m heavily leaving to option 1 but appreciate insight. I don’t see rates declining below 4.4… so I feel like if we can get this we just go for it while we can? 

Both your options are gambles, just that you're betting on different outcomes.

Like all gambles, the outcome could be anything, everyone can give an opinion but no one knows what'll happen in the coming months with mortgage rates, let alone the next 5 years.

For you personally, from your post it seems like this is stressing you out and you value certainty and with that in mind the best decision for you would probably be going for Option 1.

For me it would be Option 2, mainly because I hate locking in costs upfront (ERC, losing a good interest rate), my finances are flexible enough to live with a bad outcome and I'd regret fixing and seeing lower rates later more than not fixing and seeing them rising if that makes sense. But that's just me as an individual.

Parties03

simon_or said

For you personally, from your post it seems like this is stressing you out and you value certainty and with that in mind the best decision for you would probably be going for Option 1.

Haha is it that obvious 😂 Thank you for your reply! 

I'm just living in a lot of regret that back in 2021 I didn’t get a 5 year fixed. 

Or when we moved we didn’t get a brand new 5 year fixed at 3.8% 
Or that even this particular thought didn’t cross my mind 4 weeks ago when prices started rocketing up. 

Hindsight is amazing.  I also feel the ERC is a blow especially when I’m sticking with the same provider. 

CSI_Yorkshire

Why have you set a 6-week limit for option 2, when your present fix ends in January?  Or were you saying that the offer of 4.42% expires in 6 weeks?

Parties03

CSI_Yorkshire said:

Why have you set a 6-week limit for option 2, when your present fix ends in January?  Or were you saying that the offer of 4.42% expires in 6 weeks?

The 6 weeks is the earliest we can lock in a rate accounting for first part of mortgage expiring end of jan, and accepting that we pay ERC on the newer part, to get a whole new product. 

Earliest we can do this is 1st august which is more or less 6 weeks 

CSI_Yorkshire

Parties03 said:

CSI_Yorkshire said:

Why have you set a 6-week limit for option 2, when your present fix ends in January?  Or were you saying that the offer of 4.42% expires in 6 weeks?

The 6 weeks is the earliest we can lock in a rate accounting for first part of mortgage expiring end of jan, and accepting that we pay ERC on the newer part, to get a whole new product. 

Earliest we can do this is 1st august which is more or less 6 weeks 

So option 2 is actually "wait until some point between 1 Aug and Jan".

Personally, I wouldn't be paying any ERC if I could avoid it.  Can't you leave the newer part alone and just take a new deal for the older part?  That's what I've always done - I have had two parts on my mortgage for years, with different lengths of fixes and different renewal dates.  I use it to 'hedge' rates a little bit.