Remortgage -5 or 10 year?

shads1973 · 13 April 2018 at 8:19PM

Evening people,

Being a friday evening what better time then to look at a remortgage and some advice/feedback. Saw a broker yesterday who provided some deals, maybe just looking for some sanity check on leaning towards peace of mind of a 10 year deal or other things I need to take into consideration

Anyway some feedback. Current mortgage is a libor + 2.05% deal (mortgage is interest only and been in place for 11 years)..so at around 2.82% on a 250k mortgage we have a monthly payment of £591 (well next quarterly update is around this figure)

Current house is approx worth 400k. We have a lump sum/surplus cash of 100k we will use to reduce our mortgage to around 150k

10 year fixed @ 2.49% giving a monthly repayment of £672.14. Product has a £999 arrangement fee

5 year fixed @ 2.08% giving a monthly repayment of £641.64
Product has no arrangement fee

£30 a month for peace of mind of knowing where we are is on the face of it the only decision possibly at this stage? Not missing anything else?

leon103 · 13 April 2018 at 10:01PM

I would go with the 5 year fixed. No expert in the market and interest rates but lower interest and no fee is a positive. Plus if rates don't rise you are better off

DCFC79 · 13 April 2018 at 10:21PM

Id go for the 5 year myself.

getmore4less · 14 April 2018 at 5:12AM

LTV £150/£400 37.5% should access good rates.

With those numbers full term is 25 years

in 5y adding the fees and paying the same £672pm

£150,999 @ 2.49% £672pm £128,107
£150,000 @ 2.09% £672pm £123,973

over 5 years the real cost is £4,134 or £68.90pm

There are better rates (<2.0%) on 5y which you might be eligible for.
Quite a few have very high fees even with £1,500 the 1.84% can still work(just).

eg. First direct
5y
£150,490 @ 1.84% £672 £122,781 (£490 fee worth paying)
£150.000 @ 1.94% £672 £122,962

the fee/rate break even over the 2.09% no fee is

2.003% £500
1.927% £1000
1.851% £1500

For 10y 2.49 seems the going rate it's finding one with lower fees
FD have 10y 2.49% no fee.

That's just the product fees you have to factor in any other costs that will be different between lender and other features of the deal like ERC and overpayments.

shads1973 · 14 April 2018 at 12:08PM

getmore4less wrote: »

LTV £150/£400 37.5% should access good rates.

With those numbers full term is 25 years

in 5y adding the fees and paying the same £672pm

£150,999 @ 2.49% £672pm £128,107
£150,000 @ 2.09% £672pm £123,973

over 5 years the real cost is £4,134 or £68.90pm

There are better rates (<2.0%) on 5y which you might be eligible for.
Quite a few have very high fees even with £1,500 the 1.84% can still work(just).

eg. First direct
5y
£150,490 @ 1.84% £672 £122,781 (£490 fee worth paying)
£150.000 @ 1.94% £672 £122,962

the fee/rate break even over the 2.09% no fee is

2.003% £500
1.927% £1000
1.851% £1500

For 10y 2.49 seems the going rate it's finding one with lower fees
FD have 10y 2.49% no fee.

That's just the product fees you have to factor in any other costs that will be different between lender and other features of the deal like ERC and overpayments.

Thanks for the replies people

Should have said that the quotes were on a 25 year term. Thanks for providing real figures breakdown. Based on that 5 years does seem the logical choice. Think with our advancing years the fear is what employment we'd be in 5/10 years when we came to look at another remortgage

Most of the best buy tables did show sub 2% mortgage rates, so assumed maybe they were out of date or we didnt meet criteria when our "whole of the market" advisor presented the best deal at slightly above this rate

Heard FD mortgages can be particularly hard to obtain?

getmore4less · 14 April 2018 at 12:23PM

if you pick a lender with good record of retention deals then that becomes the fall back is circumstances change a bit.

Which lenders are the potential deals with?

dimbo61 · 14 April 2018 at 6:08PM

So what is the plan to pay off £150,000 when you are 5 or 10 years older than now ?

getmore4less · 14 April 2018 at 6:57PM

dimbo61 wrote: »

So what is the plan to pay off £150,000 when you are 5 or 10 years older than now ?

????
They are looking at 25y repayment to replace the exiting debt.

shads1973 · 14 April 2018 at 9:04PM

getmore4less wrote: »

if you pick a lender with good record of retention deals then that becomes the fall back is circumstances change a bit.

Which lenders are the potential deals with?

Mortgage Express current lender (appreciate this probably doesn't matter much)

Leeds Building Society is the 5 year deal

Coventry Building Society is the 10 year deal

The 10 year deal has no ERC from 5+ years onwards of the mortgage term, so if our circumstances are still good and better deals available the lure was we had the option of switching. And should the economy/interest rates for whatever reason have gone up more then most people seem to think/predict, we'd have the security of another 5 years

Either way obviously both products provide a better interest rate then what we're on now, and it doesn't apprear interest rates will drop that will make the current mortgage attractive (plus a new mortgage puts us on a repayment method. That's about as much logic I've tried to apply in deciding with product to take)

Thrugelmir · 14 April 2018 at 9:40PM

10 year fix will give you peace of mind. Over that time frame mortgage interest rates are going to normalise. Personally I'd take a shorter mortgage term than 25 years to take advantage of what's on offer. With 15 years left you'd still have a significant mortgage debt to repay.

Remortgage -5 or 10 year?

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