Re-mortgage now or wait?

[z4RRSchris]

market looks like 75 bbps of cut in the next 12m.

i personally think that in that 12m there will be a election, a labour gov and a budget. - loads of risk around that in addition to the other geo political factors, what will trump do? etc

[Mr_J]

I really shouldn't dip into this thread, it always makes me worried I'm missing out!

I'm on a lifetime tracker of base rate +0.75%. I was taking advantage of overpaying for a few years but then rates rose and my overpayment was consumed by the increase in monthly payment. Our LTV is c30%.

Should I be shopping around for a "better" deal? Thoughts please.

[ARHarh]

okgo said:

ARHarh said:

Inflation may be lower than it was, but it is still far from under control. It is still running at nearly 2x what everyone wants. Can't see any significant cuts yet.

The bloke who in part makes the decisions literally said this morning that he saw cuts coming, no? Word is that April inflation data will be positive..

Anyway, I see your point Chris but all that stuff was there in Feb too. Perhaps banks got burned before and are reluctant to jump the gun with their mortgage offers this time.

Yep.I know what he said, and I said any significant cuts. You may get a fraction of a percent but not enough to notice. But the BOE will claim it as positive.

[xeny]

okgo said:

The bloke who in part makes the decisions literally said this morning that he saw cuts coming, no?

Think about the amount of time Carney spent engaging in "open mouth operations" - talking a rate change for years without actually implementing it.

[Caddyshack]

Mr_J said:

I really shouldn't dip into this thread, it always makes me worried I'm missing out!

I'm on a lifetime tracker of base rate +0.75%. I was taking advantage of overpaying for a few years but then rates rose and my overpayment was consumed by the increase in monthly payment. Our LTV is c30%.

Should I be shopping around for a "better" deal? Thoughts please.

You are looking a bit expensive compared to a fixed rate now but it depends how much you value the current zero lock in and the ability to pick when to fix.

If it’s a small mortgage you may not care but on a big mortgage it will be a fair saving probably. You have missed the best of the fixed deals a while ago so you may want to wait for the promised / hinted rate cuts.

[edc]

Mr_J said:

I really shouldn't dip into this thread, it always makes me worried I'm missing out!

I'm on a lifetime tracker of base rate +0.75%. I was taking advantage of overpaying for a few years but then rates rose and my overpayment was consumed by the increase in monthly payment. Our LTV is c30%.

Should I be shopping around for a "better" deal? Thoughts please.

Always worth a look to crunch some numbers to see whether a change is worth whole. I was on a 1.x but renewal fell at Dec 23 and I'm on a 0.14% over base rate tracker.

[jrb43]

usn90 said:

I’ve locked in a 5.51% (+0.26% ) 2 year tracker with Santander, could have gone for a 4.4% 5 year fixed but wanted a tracker for unlimited overpayments.

Have until October for any improvements in deals to come up.

N=1 and PLEASE get actual advice but we learnt the error of “locking in” a tracker. Tracker deals don’t change appreciably (maybe a bit for market confidence or competition). What you want to “lock in” is a fixed deal. If come October, you don’t fancy it, you will still (very likely) have the option of this tracker.

Expert will confirm/refute my thinking.

[Defcon5]

I’m due to remortgage next November, owing approx 170 against a 300k house value

I want to take out 25k in equity when I remortgage.

Other than the increase in LTV, would doing this adversely affect the rate/available products?

Do I need to declare what the money is for? Does the reason affect the rates/products?

[Sarnie]

Defcon5 said:

I’m due to remortgage next November, owing approx 170 against a 300k house value

I want to take out 25k in equity when I remortgage.

Other than the increase in LTV, would doing this adversely affect the rate/available products?

Do I need to declare what the money is for? Does the reason affect the rates/products?

Yes you need to declare what the money is for.

The reason doesn't affect the rate, it will either be acceptable or it won't.

[CivicDuties]

Sarnie said:

Defcon5 said:

I’m due to remortgage next November, owing approx 170 against a 300k house value

I want to take out 25k in equity when I remortgage.

Other than the increase in LTV, would doing this adversely affect the rate/available products?

Do I need to declare what the money is for? Does the reason affect the rates/products?

Yes you need to declare what the money is for.

The reason doesn't affect the rate, it will either be acceptable or it won't.

I'm a bit of a maths dunce. This will become obvious in a second. I am re-mortgaging next spring, and would like some funds for some home improvements (new boiler/heating stuff, windows, reconstruct dodgy front porch), could be around £15/20k total. What's the difference between "taking out equity" and "additional borrowing"? I've 10 years left on my mortgage, about £120k outstanding against a home value roughly 10 times higher than that.

[paolow]

z4RRSchris said:

market looks like 75 bbps of cut in the next 12m.

i personally think that in that 12m there will be a election, a labour gov and a budget. - loads of risk around that in addition to the other geo political factors, what will trump do? etc

A question I have had burning in my brain is that, given many lenders are offering fixes below the current BOE rate, if for instance it DID fall by .75%, surely it doesnt follow that lenders will also drop by the same amount? A .75% drop takes the BOE rate to roughtly parity with what is being offered (currently) as a 5 year fix (if they remain unchanged). Surely lenders arent going to continue to 'discount' the BOE rate and therefore even the illustrated drop wont have an effect that is directly proportional to fixes?
Or is there something I am missing?

[z4RRSchris]

the boe rate isnt the cost of borrowing over the term. in very simple terms.

so if you go and get a 5 year fixed for example, the bank swaps that interest rate risk for a fixed today rate. 5 year sonia is 3.952% today.

they then bang a margin on that to cover the admin and their profit. they can play with that margin to fill their book if business is looking skinny. They then can go and flog that book on with a nice load of diversfied risk.

you can look at the SONIA rates below:

https://www.chathamfinancial.com/technology/europe...

you can also look at the 3m sonia forward curves to see a rough prediction of where rates might land.

https://www.chathamfinancial.com/technology/europe...

[Sarnie]

CivicDuties said:

I'm a bit of a maths dunce. This will become obvious in a second. I am re-mortgaging next spring, and would like some funds for some home improvements (new boiler/heating stuff, windows, reconstruct dodgy front porch), could be around £15/20k total. What's the difference between "taking out equity" and "additional borrowing"? I've 10 years left on my mortgage, about £120k outstanding against a home value roughly 10 times higher than that.

There is no difference, it's exactly the same thing

[CivicDuties]

Sarnie said:

CivicDuties said:

I'm a bit of a maths dunce. This will become obvious in a second. I am re-mortgaging next spring, and would like some funds for some home improvements (new boiler/heating stuff, windows, reconstruct dodgy front porch), could be around £15/20k total. What's the difference between "taking out equity" and "additional borrowing"? I've 10 years left on my mortgage, about £120k outstanding against a home value roughly 10 times higher than that.

There is no difference, it's exactly the same thing

Ah righto, thought I was missing something

[Sarnie]

paolow said:

A question I have had burning in my brain is that, given many lenders are offering fixes below the current BOE rate, if for instance it DID fall by .75%, surely it doesnt follow that lenders will also drop by the same amount? A .75% drop takes the BOE rate to roughtly parity with what is being offered (currently) as a 5 year fix (if they remain unchanged). Surely lenders arent going to continue to 'discount' the BOE rate and therefore even the illustrated drop wont have an effect that is directly proportional to fixes?
Or is there something I am missing?

You need to remove your association with the base rate and mortgage pay rates. The base rate is only one variable that goes into mortgage pay rates........add in inflation, swap rates, wars around the world, government outlook etc.

[LR90]

Sarnie said:

Yes you need to declare what the money is for.

The reason doesn't affect the rate, it will either be acceptable or it won't.

Genuine question — does this apply if you move lenders?

As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?

I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.

[paolow]

Z4 / Sarnie - thank you - that does make perfect sense

[asfault]

Defcon5 said:

I’m due to remortgage next November, owing approx 170 against a 300k house value

I want to take out 25k in equity when I remortgage.

Other than the increase in LTV, would doing this adversely affect the rate/available products?

Do I need to declare what the money is for? Does the reason affect the rates/products?

Sarnie answered the correct and proper answer but they also will never know what it's for as long as you don't blab. Basicly car, home improvements all fine.
Funding a business its a big no no from them. Don't know why I assume primarily they want to have to take out a business loan at a much higher rate.

[T_S_M]

asfault said:

Defcon5 said:

I’m due to remortgage next November, owing approx 170 against a 300k house value

I want to take out 25k in equity when I remortgage.

Other than the increase in LTV, would doing this adversely affect the rate/available products?

Do I need to declare what the money is for? Does the reason affect the rates/products?

Sarnie answered the correct and proper answer but they also will never know what it's for as long as you don't blab. Basicly car, home improvements all fine.
Funding a business its a big no no from them. Don't know why I assume primarily they want to have to take out a business loan at a much higher rate.

So say I want to borrow £25k for a new car. Would it not make more sense to add it on to the mortgage at 4-5% vs a bank loan at 8-10%? Fix for 5 years, then sell the car and pay off that £25k you borrowed on the mortgage?

Or am I being a bit thick?

[Sarnie]

LR90 said:

Genuine question — does this apply if you move lenders?

As a first-time buyer buying, say, a £1M house, they'll give you a mortgage whether you have a £500k deposit or a £250k deposit, providing of course you meet all their criteria. So why is it different if someone remortgaging wants to extract the same £250k in equity during a remortgage? So long as the LTV is acceptable and the mortgage holder meets the affordability/risk requirements, what's the difference?

I originally pondered this when interest rates started to rise back in 2021. Borrow as much as you possibly can against your house on a cheap fixed rate, and then bung it in a savings account paying a higher rate of interest. Not possible, of course, but a nice idea in theory.

The difference is that when you buy a house, the deposit comes from your own funds.

It's also worth noting that even as a FTB buyer, you have to tell and evidence to the lender where your deposit has come from, to satisfy AML requirements.

When you remortgage a property and want additional lending, you are asking the lender to borrow you the money which in most cases is increasing their LTV and therefore their risk, hence why they will want to know what you are doing with the money.