Fixed Mortgage Rate Coming to an End

Chucklechops

Hi there,

My house is worth approx. £325,000 & I have a Barclays mortgage split as follows:-

1. £31k on a variable rate of 0.74% above BBR (5.99%)
2. £31k on a fixed rate of 2.24% (ending on 31st January)

I have a meeting booked in with a Barclays mortgage provider, and I'm trying to do some research beforehand. I wondered what people's opinions were, as I don't have a sophisticated level of understanding when it comes to mortgages.

My meeting with the mortgage adviser is to decide on which rate to switch to on the fixed-rate mortgage - I think it would be unwise to fix for 5 or 10 years, so maybe a 1 or 2 year fix would be best? Possibly for 1 year, as the base rate is expected to come down next year. Or am I taking too simplistic a view?

A 1-year fix at max 60% LTV is 4.81%, and a 2-year fix is 4.81%. I'm opting not to pay any product fees.

This is the best tracker rate (without paying a produce fee):

2-year 5.74% (BBR + 0.49%)

With regard to my variable-rate mortgage, this has served me well, as I took it out not long before the credit crunch. Now, in comparison with current rates, it doesn't seem so attractive. However, I'm thinking it may be best to leave my variable rate mortgage as it is, and just switch my fixed rate mortgage to a new fixed rate one, as this would then hedge my bets.

In addition, I'm not sure if it would be best to switch to another provider, although I don't think I have time to do this now. Barclays' rates seem quite competitive.

Any guidance would be most appreciated!

Thank you for reading.

El_Torro

HSBC are offering 4.69% on a 2 year fixed rate at the moment. Not hugely below what Barclays are offering you, also as you say you've left it a bit late to change mortgage provider, though something to consider. 

The Bank of England base rate is expected to drop this year, though might not drop as fast as people expect. I wouldn't be surprised if the base rate only drops 1% or so by the end of this year. Surprising events could also make the reduction more modest. 

I think your plan makes sense, 0.49% above the base rate is a pretty attractive mortgage to have. If my fixed rate mortgage was expiring now I probably would also go for a 2 year rather than 5 year fixed rate. You may want to move both mortgages to a tracker, though this is a gamble of course.

D123456789

Hello, I would take the short term fix 1 year and overpay the tracker part if you have any spare cash. As there are no product fees, and it’s a small loan to value, I doubt it’s worth the hassle of moving provider. Depends how many years you have left to go?

ACG

If you switch to another lender you will end up the SVR for at least a month.

In terms of products, you need to weigh up the risk and reward. I was not aware you could fix for 1 year with barclays but I am not their biggest fan so not the most up to speed with their products. 

It seems a lot of hassle to remortgage now and then again in 12 months especially for £31k (or even the full £62k), the difference in interest if you get it right or wrong will be pretty minimal.