Remortgage now or wait until move?

daveybuk

Hi,

Any advice on this would be welcome.

My 5 year fixed rate mortgage recently expired, forcing me to move on to my lenders' standard variable rate (an increase, as things stand, of around £155 a month).

I didn't remortgage immediately as I hope to move within the next year, and I figured that there would be considerable fees etc to pay, which I would then incur all over again.

However, given the large monthly increase, I'm now wondering whether this is the best decision? If I remortgage, how do I make sure that I can extend the deal in the near future - is that likely to be a problem?

NeilQuinn

Most mortgage deals are portable so you could carry the same amount across to the new property on the same terms.

You'd need to know that you would qualify for the extra amount from the same lender before making this decision though. Do you know if your current mortgage is a lot less than your borrowing capabilities?

herbiesjp

You could for for a fee free lifetime tracker re-mortgage - that way you pay no fees and you have no penalties when you move property - you could stay with current lender at that point or look for a new lender depending on the rates available at that time

It just keeps all options open for you

MarkyMarkD

I personally think it's extremely foolish to remortgage when you are planning to move in the near future, unless it's to a penalty-free product.

But if you are going to do that, it's almost always (not always) better to switch products with your existing lender, if they will give you a deal with no (or low) fees and no penalties.

Remortgaging to anything with a penalty is an extreme risk - portability is a dodgy thing to rely on as any number of circumstances may stop the lender offering you a mortgage on the new property.

NeilQuinn

MarkyMarkD wrote: »

Remortgaging to anything with a penalty is an extreme risk - portability is a dodgy thing to rely on as any number of circumstances may stop the lender offering you a mortgage on the new property.

That's very true. Although if he'll still have a relatively low loan to value he should be okay. Need more info really.

MarkyMarkD

But you are a hostage to fortune in many ways. The lender you are tied to may have rubbish products available for the top-up part of the loan for your new property; you may become self-employed or pregnant or lots of things which mean you don't meet their eligibility criteria; your new property may be mortgageable in the eyes of other lenders, but not yours.

Why take on all that risk?

I have seen at least a dozen posts on here from people who have got stuffed by portability. I know that's a small proportion of those who port successfully, but for each of those involved it is several thousand pounds of cost and a lot of hassle.

daveybuk

Interesting, thanks. For info, I think my current property at present values is worth at least twice the amount remaining on the mortgage.

MarkyMarkD, you seem to be saying it probably is best to sit tight for a while if I'm serious about moving. Although it'll cost me £1500 or so minimum, I pretty much figured by the time I got involved in fees and hassle, there wouldn't be too much in it.

Incidentally, I am self-employed. How difficult does that make remortgaging? (I was self-employed too when I took out the current deal, but at that time had just started a three year contract). Now, I do have about six years worth of accounts showing successful self-employment.. do you think that will help? Also, as I've never defaulted, at worst surely my current lender will look favourably upon me?

herbiesjp

You should have no problems as long as the incoem is enough to support the mortgage amount needed

A fee free lifetime tracker with no penalties could be a good option for you rather than going onto SVR. See what deals your lender could offer with no fees and no ties

daveybuk

Are there many fixed rate mortgages around at the moment with no tie-ins that are reasonable value?

Because of my employment situation it is good to know exactly how much I need to find each month - even if it is a little more than some other types of mortgage. Then, if I have a good year, my ultimate aim would be to make extra payments to reduce the mortgage term.

herbiesjp

May be a couple of fixed rates with no ties, but far higher than the tracker deals

daveybuk

Ok thanks. As you can probably tell, I'm dabbling around the edges of this issue at the moment (kind of hoping it would sort itself out on its own - but I know that's not really going to happen)...

Looks like I ought to have a chat with an IFA. Cheers for your help.