Remortgage now to lock in long-term low rate?
Discussion
I'm currently about halfway through a 5 year fixed rate mortgage at a rate of about 3.7%. I've seen a few current deals that I would be eligible for with fixed rates at 2.1-2.2% for 5 years and am wondering about paying the early redemption on my existing deal and getting the lower rate.
Assuming that I wrap the early remption penalty and other fees into the new deal, I've worked out that there would basically be no difference in the total debt due in two and a half years time (when the existing deal would end). However if I change now, I'll still have the benefit from 2019 of another two and a half years fixed at what seems to be a very competitive rate.
I keep hearing that with US rates on the rise, the best mortgage deals have probably already been and gone. I guess my question is do we think that these low-2% deals are going to be around over the next couple of years or should I grab it now whilst I can?
Any views or opinions gratefully received.
Assuming that I wrap the early remption penalty and other fees into the new deal, I've worked out that there would basically be no difference in the total debt due in two and a half years time (when the existing deal would end). However if I change now, I'll still have the benefit from 2019 of another two and a half years fixed at what seems to be a very competitive rate.
I keep hearing that with US rates on the rise, the best mortgage deals have probably already been and gone. I guess my question is do we think that these low-2% deals are going to be around over the next couple of years or should I grab it now whilst I can?
Any views or opinions gratefully received.
Allowing for the extra costs of switching, there would be no difference in the remaining amount payable in two and a half years time, assuming that we would make overpayments on the new deal to take us up to the same monthly payment as present.
From that point onwards, we would benefit from the new deal, assuming we wouldn't be able to get the same, or better, deal at that time. So there's a fair bit of crystal ball gazing involved I suppose but sentiment seems to be that rates are only going one way.
I'm just trying to figure out if it's really worth the hassle of switching to have the security of a fixed rate of 2.2% running through to the start of 2022.
From that point onwards, we would benefit from the new deal, assuming we wouldn't be able to get the same, or better, deal at that time. So there's a fair bit of crystal ball gazing involved I suppose but sentiment seems to be that rates are only going one way.
I'm just trying to figure out if it's really worth the hassle of switching to have the security of a fixed rate of 2.2% running through to the start of 2022.
lauda said:
It's 71% based on our current outstanding balance and using the price we paid for the house in June 2014.
To remortgage, we'd need to lump in the early redemption fees and other costs so it would probably be more like 74%.
What are the product fees? Eg arrangement fee, booking fee, valuation fee, solicitors fees?To remortgage, we'd need to lump in the early redemption fees and other costs so it would probably be more like 74%.
JapanRed said:
Personally I think the low rates will be round for the next 10 years or so. Having said that, your current rate is quite high. Basically you need to work out the cost of ending your existing deal, versus the savings of a new deal.
I agree. We will see a token rate rise but it's not going to shoot the lights out. The economy couldn't handle rates worth talking about, it would strangle it.Does you redemption penalty drop as you get closer to the expiry of the fixed rate? Eg after 3 years it is 2% not 3 %? If so and your next anniversary date is less than 6 months away it may be worth waiting. If the differential on the mortgage is 1.5% (approx) and you save 1% by waiting 6 months then it is cheaper to wait. Allow a couple of months for the remortgage to be processed and there's probably all the more reason to wait. You can probably lock the rate in now if you are worried about the rates moving (I think long term rates will start to go up but slowly) and then try and tee everything up for a few days after the anniversary date (assuming the penalty decreases over time, which most do). It would also give you a chance of getting your LTV below 70% which may open up some cheaper rates.
Good luck - Sarnie on here is a broker and has been helpful to both me and others on here.
Good luck - Sarnie on here is a broker and has been helpful to both me and others on here.
lauda said:
No booking fee, the arrangement fee is £995, valuation is £415 and the lender (Tesco) cover the basic legal costs.
The arrangement fee can be waived but the interest rate then increases from 2.19% to 2.29%.
The biggest kicker is the early redemption penalty which is just over £11k
I have access to a 2.19% product with no valuation or legal fees and a £200 arrangement fee.The arrangement fee can be waived but the interest rate then increases from 2.19% to 2.29%.
The biggest kicker is the early redemption penalty which is just over £11k
Or 1.99% with a £900 arrangement fee and free legals and valuation..
Drop me a line if you want a chat!
gangzoom said:
Sarnie said:
I have access to a 2.19% product with no valuation or legal fees and a £200 arrangement fee.
Or 1.99% with a £900 arrangement fee and free legals and valuation..
Drop me a line if you want a chat!
Have sent you PM, like the sound of what you can offer Or 1.99% with a £900 arrangement fee and free legals and valuation..
Drop me a line if you want a chat!
. williaa68 said:
Does you redemption penalty drop as you get closer to the expiry of the fixed rate? Eg after 3 years it is 2% not 3 %? If so and your next anniversary date is less than 6 months away it may be worth waiting. If the differential on the mortgage is 1.5% (approx) and you save 1% by waiting 6 months then it is cheaper to wait. Allow a couple of months for the remortgage to be processed and there's probably all the more reason to wait. You can probably lock the rate in now if you are worried about the rates moving (I think long term rates will start to go up but slowly) and then try and tee everything up for a few days after the anniversary date (assuming the penalty decreases over time, which most do). It would also give you a chance of getting your LTV below 70% which may open up some cheaper rates.
Good luck - Sarnie on here is a broker and has been helpful to both me and others on here.
Thanks Andrew. The penalty does drop each year but we've just passed an anniversary date in October on the largest tranche of the mortgage (went down from 4% to 3%). The fee on the other tranche would drop from 4 to 3 in March next year which would make about £1k difference but not sure I want to wait until then. Decisions, decisions...Good luck - Sarnie on here is a broker and has been helpful to both me and others on here.
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