Remortgage advice 2024

Seeking advice please.

I am self employed, on Mat leave October 2023 until June 2024. Getting Mat allowance. 

My partner is employed.

Our mortgage expires April 2024 at a wonderful 1.49% 😭

I spoke to my mortgage advisor and he gave me 2 year and 5 year fixed rates at around 5%.

I am thinking of going limited from March 2024. 

My question and options are:

If I fix for 2 years then when I am remortgaging I will have a lower income (from Mat leave) AND only 1 year of limited company accounts. I know this will affect remortgaging for the worse.

If I fix for 5 years, I will have the security knowing when I remortgage I will have more years accounts to show the lenders if I go limited plus more time to show my income going back to pre maternity leave plus could potentially squeeze another child in with another mat leave lol. But, I feel being on 5% for 5 years is not great as lower rates “may” start coming in and I will lose out.

Of course, as my advisor suggested, it is a gamble, we don’t know where rates will be so I could be better off or worse off. I am a little annoyed though as I wasn’t advised to fix for 5+ years when my rate was the lowest historically (1.49%) and as an advisor I thought they would advise appropriately knowing the historic rates.

My other option is NOT to become limited yet until my next remortgage (2026) so that I can fix for 2 years now and then remortgage for 5 years at a (hopefully) better rate in the future and then become limited etc. 

What would you suggest to do? My mortgage advisor didn’t really comment, he just gave me the two options and that’s it. He did mention re my Mat leave reduced income plus if I become limited there will be fewer lenders willing to lend for just 1 year of accounts which I knew about already. 

Any advice will be appreciated.

Comments

  • dunstonh
    dunstonh Posts: 115,724
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    I am thinking of going limited from March 2024. 
    So, product transfer would make your life a lot easier than a remortgage.

    If I fix for 2 years then when I am remortgaging I will have a lower income (from Mat leave) AND only 1 year of limited company accounts. I know this will affect remortgaging for the worse.
    But it will have no impact on a product transfer.

    Of course, as my advisor suggested, it is a gamble, we don’t know where rates will be so I could be better off or worse off. I am a little annoyed though as I wasn’t advised to fix for 5+ years when my rate was the lowest historically (1.49%) and as an advisor I thought they would advise appropriately knowing the historic rates.
    You cannot be annoyed about not guessing something that is unpredictable.    Rates were that low for over a decade and if you had gone 5 year fixed over the bulk of that period, it would have cost more than short term fixes.    Nobody guessed that the effects of the ending of quantative easing would unwind that quickly.

    Would you have been annoyed at a decade of higher interest rates too because they didnt go up during that period?


    What would you suggest to do?
    What are the current product transfer terms?


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Hoenir
    Hoenir Posts: 1,270
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    Your mortgage advisor can only provide you with options to chose from. We live now in a compensation culture. People would have no hesitation in seeking same if they considered themselves wrongly advised. Hindsight is a wonderful human invention when seeking to blame. 
  • ACG
    ACG Posts: 23,624
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    I would not want to make any guarantees, but there are lenders who work off 1 years accounts (at normal rates) and/or lenders who could take 3 years account (good year, mat leave year, good year) and with an explanation could take a view to using your higher income. 

    OR you could do a product transfer with the lender that you are with, that means switching products with no underwriting. However rates might be a little higher than normal... As an example, my mortgage is with Virgin Money. When I bought my house we were child free and my Mrs worked full time. Now we have a kid, less sleep and my Mrs works part time, we cant get a mortgage for the amount we need so are stuck with VM. We are paying around 0.25% above what would have been available elsewhere had we had the choice. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • dunstonh said:
    I am thinking of going limited from March 2024. 
    So, product transfer would make your life a lot easier than a remortgage.

    If I fix for 2 years then when I am remortgaging I will have a lower income (from Mat leave) AND only 1 year of limited company accounts. I know this will affect remortgaging for the worse.
    But it will have no impact on a product transfer.

    Of course, as my advisor suggested, it is a gamble, we don’t know where rates will be so I could be better off or worse off. I am a little annoyed though as I wasn’t advised to fix for 5+ years when my rate was the lowest historically (1.49%) and as an advisor I thought they would advise appropriately knowing the historic rates.
    You cannot be annoyed about not guessing something that is unpredictable.    Rates were that low for over a decade and if you had gone 5 year fixed over the bulk of that period, it would have cost more than short term fixes.    Nobody guessed that the effects of the ending of quantative easing would unwind that quickly.

    Would you have been annoyed at a decade of higher interest rates too because they didnt go up during that period?


    What would you suggest to do?
    What are the current product transfer terms?


    Thank you for your reply. 

    So we were advised product transfer (sorry I am not familiar with mortgage terms so mis wrote remortgage) as our term now has changed from 20 to 30 years as we want to keep the monthly cost the same. 

    So the new rate is up to 5% for both 2 years and 5 years (less for 5 years around 4.89%). 


  • MWT
    MWT Posts: 9,138
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    If I fix for 2 years then when I am remortgaging I will have a lower income (from Mat leave) AND only 1 year of limited company accounts. I know this will affect remortgaging for the worse.

    As has been said, this is only an issue if you are changing lenders, if you really believe that the rates will be lower in 2 years time then you can take the shorter fix and stay with your current lender for a new fix after that without your employment status or accounts being an issue....

  • Hoenir
    Hoenir Posts: 1,270
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    So we were advised product transfer (sorry I am not familiar with mortgage terms so mis wrote remortgage) as our term now has changed from 20 to 30 years as we want to keep the monthly cost the same. 

    So the new rate is up to 5% for both 2 years and 5 years (less for 5 years around 4.89%). 


    While you are maintaining the same monthly outgoing. You'll be repaying capital back at a slower rate. Over the term of the mortgage it's going to cost around 60 times your monthly payment in additional interest charges. A far bigger sum than you are blaming the mortgage advisor for costing you. 
  • RelievedSheff
    RelievedSheff Posts: 11,126
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    Hoenir said:

    So we were advised product transfer (sorry I am not familiar with mortgage terms so mis wrote remortgage) as our term now has changed from 20 to 30 years as we want to keep the monthly cost the same. 

    So the new rate is up to 5% for both 2 years and 5 years (less for 5 years around 4.89%). 


    While you are maintaining the same monthly outgoing. You'll be repaying capital back at a slower rate. Over the term of the mortgage it's going to cost around 60 times your monthly payment in additional interest charges. A far bigger sum than you are blaming the mortgage advisor for costing you. 
    People often forget that part.
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