Confirming what to do - Remortgage

funkyfin2000

Hi All,

We are one of those people who are coming off a great rate (NatWest 1.72%) from 1st April.

We went with L&C in Dec and the best deal showing (and still is on MSE) is HSBC 4.04% deal (no fee) 2 year fixed - but has cash back so despite not being the best % wise, the overall cost is better. We locked that in and have all the solicitors sorted and ready to go as soon as we finish the Natwest rate at the end of March to avoid at ERC's

So the question is - do we fix in at 2 year or 5 year (slightly better rate for 5 year) - I know no-one has a crystal ball so it's difficult. Also the next BOE decision is 19th March so we may find a drop in the Base Rate which might bring deals down (maybe!)

Current morgage is £168k - 20 years to go.

Alongside that we have £10k to take off the balance - currently we get slightly more in interest with it at 4.5% but we are aiming to pump that into the mortgage to reduce the balance.

Thoughts welcome from people far more knowledgeable than us! :)

El_Torro

You say that the 5 year deal is a bit better than the 2 year deal. Would be useful to know what the 5 year deal is if you're asking for opinions on which one is better.

The Bank of England interest rate is expected to continue to drop. What it will look like 2 or 3 years from now is anyone's guess though really.

funkyfin2000

Ahh yes sorry!

5yr - cheapest First Direct - 3.89% (HSBC is a tiny bit more expensive on 3.97%)

2yr - best deal overall - 4.02% (HSBC) including the cashback (best % deal is First Direct 3.94%)

El_Torro

My personal view is that 3.89% isn’t a great deal for 5 years. I would be tempted to go with 2 years and see what interest rates are like then.

It also depends on how much you value not getting mortgage deals too frequently.

RelievedSheff

I would personally take the five year fix.

Even if BOE rates drop a bit further I don't see fixed mortgage rates dropping much, if any more.

Which is why we are happy to fix at the 4.04% we have secured for five years with Halifax.

MFWannabe

what rates are NatWest (current lender) offering?

jimjames

My personal view is that 3.89% isn’t a great deal for 5 years. I would be tempted to go with 2 years and see what interest rates are like then.

Interested to understand why it isn't a great deal? Just because rates were as low as 1.72% before? If you'd asked before 2009 then I think everyone would have jumped at a rate as low as 3.89% fixed for 5 years.

funkyfin2000

In terms of NatWest they are worse rates - only by aroud £400 or so, but thought we'd chase the saving given HSBC was lower total cost in the end. It wasn't going to 'cost' me as such as conveyancing etc was all included - just I suppose a hard credit check on file which doesn't both us.

Given what's happened over the weekend, I'm leaning towards getting it moved to a 5 year fixed ASAP - there could be some pain coming dependent on the ME situation!

funkyfin2000

Anyone else have any other views?

london21

Similar situation thinking 2 years fix without product fee for me, I was eepcting the rates to have dropped further but now the Iran war.

funkyfin2000

Yeah that's the toss up now - 2 year and hope it calms down and inflation falls, or 5 year lock in and get security and forget about it all. It's a really tough call.

I've also just found out the Natwest app still has a 5yr fixed no fee for 4.02% which is way better than pretty much anything now on the market. I would suggest this would be pulled ASAP. So need to make a decision! Argh!