Is it worth taking a 5 year fix now?

Pezza4u

BarelySentientAI said:

Almost all fixes 'sort of' have a product fee, because the fee-free ones are a bit higher interest than the equivalent fee-paying one.

Yes of course. The 5 year fix with the fee was only 0.18% lower. On the fee free one, although the interest is a little higher, at the end of 5 years I would've only paid £500 more in interest compared to the £999 fee one! So it made sense to go for the one without the fee.

If I had renewed next year on another tracker I definitely would've had a fee to pay, Santander don't seem to do those without fees.

Anyway, I've taken the 4.46% fix, just waiting for them to send the confirmation email for when it'll start. I just hope I don't regret it.

BarelySentientAI

Pezza4u said:

BarelySentientAI said:

Almost all fixes 'sort of' have a product fee, because the fee-free ones are a bit higher interest than the equivalent fee-paying one.

Yes of course. The 5 year fix with the fee was only 0.18% lower. On the fee free one, although the interest is a little higher, at the end of 5 years I would've only paid £500 more in interest compared to the £999 fee one! So it made sense to go for the one without the fee.

If I had renewed next year on another tracker I definitely would've had a fee to pay, Santander don't seem to do those without fees.

Anyway, I've taken the 4.46% fix, just waiting for them to send the confirmation email for when it'll start. I just hope I don't regret it.

Your logic is sound.  Don't regret making a logical choice, even if some of your assumptions later turn out to be false.  Nobody can always make perfect decisions.

Pezza4u

Yes that's true. The rate I've taken is affordable and no one knows for certain what will happen in the future.

I just logged in to my account and checked the fixed deals. To my surprise they have increased today. Only a small one (0.08%) but still an increase. Have swap rates increased recently or could this be because the BoE held the base rate?

BikingBud

Pezza4u said:

Thanks @fergie_ some good points. One thing I did consider was if I stay on the tracker until next year I'll also have a product fee to pay when I switch to a new rate if i stick with a tracker. All trackers seem to have product fees but not all fixed rates do.

There is nothing in the mortgage offer about porting but looking on Santander's website all fixed rates can be transferred to a new property. So if I transfer the full amount there is no ERC, providing I meet the terms, and if it's less I only pay on what I give back.

https://www.santander.co.uk/personal/mortgages/existing-customers/moving-home

If I was to move in year one of the fix the ERC would be up to £5k. I know we won't move until year 3 at least and the maximum then would be £3k. If we can move and clear the mortgage it's probably still worth paying the ERC than carry on paying a mortgage with lots of interest.

Great point at the end of the day its only another cost, in amongst SDLT, EA fees, moving costs etc,

It may be worthwhile jumping so keep track on what your ERC might be at any point and bear in mind that this is an offset against interest not yet paid so the difference might be lower than you think. It tells you on the mortgage tab of the Santander App "ERC to repay loan in full......"