Re-Mortgaging, advice needed!

Marvo434

In a nutshell, we want the Spanish holiday home, and one has come up exactly where we want to be, and at the right price (circa £120K).

We feel that we want to own something outright, so want to re-mortgage our home in England to buy the Spanish one.

We currently have approx. £132K mortgage broken down as £58K repayment and £74K endowment (under performing by about £13K). Our home is worth about £470K.

In 2012 I should get a lump sum (NOT endowment related) on retirement from my current job of approx £127K, although I will only be 48 and will probably start working elsewhere.

We can get an increase of £130K (purchase plus fees etc) from either Woolwich (who we are with, not tied in) or halifax.

We cannot afford to make the whole £262K a repayment mortgage.

Woolwich offer 5 year fixed at 4.69%, Halifax 2 year at 4.39%.

Should we fix or go variable? Are these rates competitive? Should we make the new amount repayment or endowment? Any other advice?

I thank you now for your help and advice, which i will obviously treat as it is given, as friendly advice only and do background myself etc etc etc ..

herbiesjp

There may well be some rates better than the 4.39% you quote

Marvo434

Thanks, but is fixed rate the way to go, or should we go either variable or interest only?

MarkyMarkD

The choice between fixed and variable is yours - dependant on your view of future interest rate changes. All things being equal, it will cost you the same over the term - but all things are not equal over most historical periods! In other words, choosing fixed or variable is as much of a gamble as anything else.

Obviously you don't want to have a repayment penalty period longer than your target repayment period - but 2012 is far enough away not to worry about.

In your circumstances, I would go for interest only for the amount which will be matched by your expected lump sum, and repayment for the rest over the shortest period you can afford.

I'm assuming that affordability isn't an issue for the increased mortgage size.

Marvo434

Thanks again, but taken purely as a personal opinion, what do you lot think about interest rates over the coming 5 years? Stable, up or down?