Long term fix even though planning on a move

g0009348 · 8 October 2018 at 6:21PM

Hello All

Any advice is appreciated.

My fix is due to end in December and I can get a two year no fee deal for 1.79%, borrowing 104,000 for a house valued at 200,000.

We need to move within 3 years tops and I’m wondering if it’s worth getting a 5 or 10 year fix which is portable and securing a low rate whilst they are very low.

Does this make any sense considering when we move we would be looking to borrow an additional 100,000, so 200,000 in total.

Or should I look for a short term mortgage or one with a small/no Erc

Thanks

middleclassbutpoor · 8 October 2018 at 6:30PM

You always run the risk of the portability option being refused/declined if the property or your circumstances are not acceptable to the lender in the future. If rates increase, criteria could become more difficult also possibly.

You may feel that the risk of being declined is low risk but as you are dealing with crystal ball scenario planning - you should just consider what the ERC would be on the deal and decide whether that would stop you moving if it wasn't possible to exercise the portability option.

Alternatively, if you HAVE to move in 3 years and the ERC would be potentially an issue, I wouldn't risk relying on you meeting criteria in the future

g0009348 · 8 October 2018 at 6:51PM

Thanks, it’s a good point. I don’t think an erc would stop the move but a +3% increase in interest rate could. Chances of that are slim though I guess within a short space of time

middleclassbutpoor · 8 October 2018 at 6:59PM

You could find in 3 years time that you cannot borrow what you need on the property regardless of your current deal. It depends on too many variables and unknowns.

If rates have increased and you would not move because of this (assume you are considering upsizing or moving to a more expensive property) then of course you would probably feel more comfortable on a longer term fixed rate.

You roll the dice with anything like this. You just got to do what feels right and understand the variables and work out what you would do if X, Y OR Z happened.

xyz123 · 9 October 2018 at 8:16AM

g0009348 wrote: »

Thanks, it’s a good point. I don’t think an erc would stop the move but a +3% increase in interest rate could. Chances of that are slim though I guess within a short space of time

I don't understand the point re interest rate increase. If u r saying it will go up and you won't be able to get a mortgage when you move then please check with your lender. When you ask for extra £100,000 it will be stress tested as per interest rates prevailing at the time (stress test is at higher rate than bank of England rate)..

foxy-stoat · 9 October 2018 at 9:41AM

g0009348 wrote: »

Thanks, it’s a good point. I don’t think an erc would stop the move but a +3% increase in interest rate could. Chances of that are slim though I guess within a short space of time

What - do you know that interest rates are going up by 3% in 3 years?

Long term fix even though planning on a move

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