Remortgage or Tracker Mortgage

xiteex

Sorry for the dumb question, this is my first time buying and selling a property. I took a 2 year fixed rate on my current property in November 2023 so I assumed it would end this November. I spoke to my mortgage broker and told them that I would like to sell and he told me that my mortgage ends July 31st this year. My property is not even on the market yet so I don't think there is a chance to sell before my current mortgage ends. My mortgage broker suggested going onto a tracker mortgage, my head was blank at that point so I could ask anymore questions but later I checked it online and there is a product fee and early repayment charge for the tracker. Its based on the BoE rate so it can go up or down, then I thought if I remortgage it for 2 years and secure the rate that then gives me plenty of time to sell and buy as either way I would have to pay an early repayment charge and fee so ... What do people normally do in this situation?

Thanks for your time.

Hoenir

If you were to take another fixed term product you could port it across to the new property. This option has obvious restrictions. Should you wish not to remain with your current lender.

Surprised there's an ERC on a base rate tracker product with an alternative lender.

Product fees can make a material difference to what is the best product choice over a particular time period. Soon erase any benefits from a lower interest rate. 

feynman33

Basically you'll need to do the maths on the various options and determine whats best, which is pretty hard if you're not sure how long it will take to sell.

If you plan to stay with your current lender regardless then the best option is likely to be taking a fix and porting it to your new place, if you dont want to do that then estimate how many months you think you might run past your current fix and weigh up the cost of lapsing onto the svr vs 2 year fixed or tracker rates and erc's.

The svr will be the highest cost per month but free to get out of, so if you're confident it'll just be a couple months it may be the best option, a 2 year fix will cost you £0 per month, but has the higher erc, a tracker should be somewhere in the middle paying a little more than the fix per month, but has smaller % erc. 

Both tracker and fix should have a slightly higher rate option with no product fee, which you should be going with if you think you're going to be paying the erc...

gwynlas

It is probably not a good idea to consider moving every two years due to associated costs unless of course you have completely refurbished the house and can release substantial equity.

kingstreet

xiteex said:

Sorry for the dumb question, this is my first time buying and selling a property. I took a 2 year fixed rate on my current property in November 2023 so I assumed it would end this November. I spoke to my mortgage broker and told them that I would like to sell and he told me that my mortgage ends July 31st this year. My property is not even on the market yet so I don't think there is a chance to sell before my current mortgage ends. My mortgage broker suggested going onto a tracker mortgage, my head was blank at that point so I could ask anymore questions but later I checked it online and there is a product fee and early repayment charge for the tracker. Its based on the BoE rate so it can go up or down, then I thought if I remortgage it for 2 years and secure the rate that then gives me plenty of time to sell and buy as either way I would have to pay an early repayment charge and fee so ... What do people normally do in this situation?

Thanks for your time.

There are fee-free and ERC-free trackers available. Then you have a no-cost escape if you don't move, or a free choice of lender if you do.