Re-mortgage advice for 28-year-old

SheffWolf95

Hi all,
I'm currently on a two-year fixed term with Santander which is due to run out at the start of January 2024. I have got in contact with my broker who has presented me with prices and while I expected an increase, if interest rates do not drop before the end of the year, I am looking at an almost £300 increase in payments per month to go into another two-year fixed term.

I am aware that there is still time and that I do not have to commit to anything yet but I'm trying to get a feel of what other options are on the table and would like advice about the following:

1) Getting an interest only mortgage for 6 months
This is something that Santander offers and I am tempted by this in the hope that by next summer, rates will have settled down and mortgage payments will be more affordable. Does anyone have experience of these and is it worth it?

2) A buy to let mortgage
Another option on the table is moving in with my partner to his flat which he owns. However, I understand I would need a 25 per cent deposit to do this and 125% rental yield.

Keen to know what people in similar situations are thinking of doing and what people think will happen to interest rates over the next few months and into 2024.

Thanks and appreciate any advice   

CSI_Yorkshire

1)  It would make things cheaper in the short term and more expensive in the long term (because you've missed out on 6 months of capital repayments).

2)  Do you really want to become an 'accidental landlord' with all of the legal responsibilities, the time paying the mortgage when you don't have tenants, the chance that you might not get your home back without going to court etc?

You are young - have you considered extending the term of the mortgage to reduce the monthly payments.  If you have spare cash you can always overpay to get it cleared sooner but it would help with cashflow.

FashionHeart

SheffWolf95 said:

Hi all,
I'm currently on a two-year fixed term with Santander which is due to run out at the start of January 2024. I have got in contact with my broker who has presented me with prices and while I expected an increase, if interest rates do not drop before the end of the year, I am looking at an almost £300 increase in payments per month to go into another two-year fixed term.

I am aware that there is still time and that I do not have to commit to anything yet but I'm trying to get a feel of what other options are on the table and would like advice about the following:

1) Getting an interest only mortgage for 6 months
This is something that Santander offers and I am tempted by this in the hope that by next summer, rates will have settled down and mortgage payments will be more affordable. Does anyone have experience of these and is it worth it?

2) A buy to let mortgage
Another option on the table is moving in with my partner to his flat which he owns. However, I understand I would need a 25 per cent deposit to do this and 125% rental yield.

Keen to know what people in similar situations are thinking of doing and what people think will happen to interest rates over the next few months and into 2024.

Thanks and appreciate any advice   

It will work out more expensive if you get an interest-only mortgage for 6 months as your mortgage will end up being in arrears.
People should remember that when COVID-19 started, banks offered payment holidays - they learned the hard way that they owed more money than they initially thought because of the missed payments for that period.