Best approach to small remortgage?

limoncello23

I've got just under a year to run on a 5-year fix, I have a lump sum which I intend to use to overpay and so reduce the term, which means that I'll be looking to take out a £55k remortgage in May 2024 with a 10 year term.

My understanding is that under the current rules I should start looking at deals about 6 months before I want to switch so Nov/Dec 2023. I have heard that once a mortgage gets below £50k it's not really possible to switch lenders, so I'm assuming that whoever I switch to is who I'll be with for the full term.

Looking at what's available at the moment:

1. I could take out a very long fix (eg 10 years at 5.19% with Nationwide or 7 years at 5.24% with Virgin Money) and have the security of knowing that my mortgage payment is very affordable regardless of what happens to interest rates. There's obviously a risk that rates might come down over that period, and so I'd be overpaying.
2. I could take out the longest tracker possible (eg term at 7.59% with Bank of Ireland or 5 years at 5.6% with Barclays) expecting interest rates to fall over the next 5 years
3. I could take out a shorter fix or tracker (eg 2 years or 5 years) and hope that the standard variable rate for the rest of the term is ok, which would presumably mean hoping that interest rates will fall significantly.

Clearly, when I come to look those deals will have gone, and there will be others available that may well be in the 6%+ range.

On the face of it, a 10 year (or the longest possible) fix looks the most attractive deal as long as the interest rate is competitive. Is there anything I'm missing? What would you do in my situation?

Newbie_John

Right now it's still a bit of crystal ball, I'd wait till November with this question. There may be some new rules introduced by government, inflation could drop drastically low etc.

But if you were in this position now - it would be good to know your financial situation a bit better.
£55k mortgage for 10 years at 5.2% fixed costs you monthly £589.
Some people would go for 10 years just so they know how much will it cost them.
Some would go for 2 years fixed, hope for better rate in future, save, and overpay again before next switch or even pay in full.

It really depends.

VNX

have heard that once a mortgage gets below £50k it's not really possible to switch lenders

Is this true?

Snow_Phoenix

I think the comment about not being able to change lenders below £50k is from the following article which just suggests it may not be cost effective after a certain point taking into account fees which go with switching mortgage companies and that a lot of times if the amount is below £25k some lenders will not offer a mortgage. 

https://www.moneysavingexpert.com/mortgages/why-remortgage/