I am repaying my mortgage, but I may move. Need to fix in 2 or 5 years?

My mortgage fixed term is nearing the end and I’m looking for a remortgage.

Given the low rates currently available, the five-year fix seems like a good idea, but it’s possible that you’ll go home before the period expires.

Should I make longer amendments or opt for a two or three year contract? Will I be penalized if I move for 5 years of repairs?

Mortgage rates have risen after reaching record lows, so it may be a good time to fix them now.

Angelique Rujika replies, this is money: Mortgage rates hit record lows this year, but the window to take advantage of the cheapest deals possible is closed.

Mortgage rates have risen above the Bank of England’s expectations of rising interest rates last month and fell slightly when that didn’t happen, but the lowest fixed-rate mortgages offered below 1% are gone.

The top two and five year fixed rates for people with huge deposits are now slightly above 1.1% and 1.3%, respectively.

This is expected to continue, and the Department of Budget and Responsibility (OBR) predicts that mortgage interest costs will rise in 2022, averaging 13.1% in 2023.

Laura Suter of investment platform AJ Bell said: Their costs will rise by £ 1,068 per year.

Given this and the expected rise in the Bank of England’s base interest rate, a correction now may seem like a good idea as it is fixed at a cheaper interest rate. However, if you settle your mortgage before the end date of the first transaction, you will incur an early repayment fee.

There are more flexible mortgage options, such as some modifications without early repayment fees and free trackers, but these are often more expensive.

The advantage of a short fix is ​​that you get a slightly cheaper rate than a long fix, but it may be worth making a longer fix to protect yourself from rising for a longer period of time.

Your potential moves cause potential problems for longer fixes, but many can be taken with you in a process known as porting. This requires sticking to the same lender, getting them to agree on your new property, and potentially borrowing more with them.

Here, mortgage professionals offer some potential solutions to your problem.

David Hollingworth, Associate Director of Broker L & C Mortgages, replied: Fixed rates are very competitive overall, and as a result, many borrowers have determined that a longer fixed rate could be a good move for them.

This is especially true when expectations for rising interest rates are rising and lock-in at low interest rates can have obvious benefits.

However, it is worth considering how potential home relocations fit into your mortgage product choice.

Most mortgage transactions are portable. This means you can bring it into a new home without having to break the deal and risking an ERC.

However, there is no guarantee that the lender will be able to meet the new lending requirements.

They still need to perform an affordable check and agree to lend the property. It may limit your options when you come to move and additional borrowing will be done at the rate available from the lender at that time.

Therefore, it is advisable to consider linking the fixed rate and ERC period to the expected time points at which you may move.

It will allow you to search for the best deal at the time to meet your new requirements, whether you are a new or existing lender. Dvid

Can I fix it without an early repayment fee?

David Hollingworth says: For some transactions, you will always be offered the opportunity to modify the rate without applying ERC or for a shorter period than the modification period.

For example, both Leeds BS and Coventry BS offer a fixed interest rate of 5 years without ERC, and Habito can be fixed for a lifetime without applying ERC.

TSB offers a fixed interest rate of 5 years, which fixes the borrower for only 3 years.

The prices for these transactions may not be as low as the standard fixed rates, but they can provide the flexibility and stability you are looking for.

Ask your lender to match the price with the best rate

Reply by Ross Counsell, Chartered Surveyor and Director of Good Move: It is worth asking your current provider if it matches a new transaction found elsewhere.

What does it mean to increase mortgage interest costs by 13%?

The OBR did not mention that mortgage rates suddenly rose 13.1 percentage points to nearly 15 percent.

Instead, the budget document referred to a 13.1 percent increase in mortgage interest costs.

For a £ 250,000 mortgage at a regular rate, this adds about £ 600 a year to your payment, and for a £ 450,000 mortgage, you add £ 1,068 a year.

> How much does a new mortgage cost?Compare rates

Being with your current lender can save you a lot of time and money because you don’t have to go through a complete remortgage process.

While a five-year fixed may be attractive, interest rates tend to be more stable than short-term mortgages, so there are many factors to consider before committing to a five-year option.

Lifestyle changes, such as starting a family, can mean that you want to move home before the end of a period of time. In this case, it is advisable to choose a shorter fix.

Seek advice from a qualified financial professional. Doing so not only means that you get the best option, but also if the mortgage you choose turns out to be inadequate, or if something goes wrong for some reason, FOS ( It also means that you can complain to the financial ombudsman service).

Also, to avoid disappointment, you need to make sure that you pass a regular credit check before applying for a mortgage.

In addition, timing is important when applying for a mortgage.

Most mortgage lenders can secure interest rates up to three months in advance, but they don’t have to start paying their mortgages right away.

For example, if your current mortgage transaction closes in April but you find a large number of transactions in January, you can fix a better rate and continue to repay your current mortgage until the switch date. increase.

This eliminates the need to pay a fee to close the transaction early.

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I am repaying my mortgage, but I may move. Need to fix in 2 or 5 years?

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