In November, my husband and I will be faced with the decision of remortgaging our property. Unfortunately, our available options are far from ideal, leaving us feeling financially constrained. One possibility on the table is a two-year fixed-rate deal, offering an interest rate of 5.64%. However, this option comes with a rather hefty product fee of £1,249. If we choose to include this fee in our loan amount, our monthly repayment would amount to £1,837. Alternatively, if we decide to pay the fee separately, our monthly repayment would be slightly reduced to £1,830.
As an alternative, we have also been presented with a five-year fixed-rate deal at a lower interest rate of 5.23%. Similar to the previous offer, this option also involves a product fee of £1,249. If we opt to roll this fee into our loan, our monthly repayment would be £1,745. Conversely, if we were to pay the fee upfront, our monthly repayment would decrease slightly to £1,739.
In light of these choices, we find ourselves grappling with the question of which path to take. The impending increase in our mortgage payments has added to the urgency of our decision-making process. We need to carefully consider the long-term implications and financial impact of each option.
On one hand, the two-year fixed-rate deal provides us with some stability and predictability for a shorter period. With a fixed interest rate, we can rest assured that our monthly repayments will remain consistent throughout the initial two-year term. However, the higher interest rate of 5.64% and substantial product fee give us cause for concern. Taking into account the potential repercussions, such as the increased total cost of borrowing over time, we must weigh the immediate benefits against the long-term drawbacks.
On the other hand, the five-year fixed-rate deal offers a more competitive interest rate of 5.23%, which could potentially save us money over the long haul. Additionally, by spreading the product fee over a longer duration, our monthly repayments would be slightly more manageable at £1,745. However, committing to a longer fixed-rate term means sacrificing flexibility and potentially missing out on better deals that may emerge in the future.
Ultimately, our decision hinges upon various factors: our current financial situation, our risk tolerance, and our long-term plans for the property. Seeking professional advice from an impartial mortgage advisor could provide us with valuable insights and help us navigate this complex decision-making process.
In conclusion, the impending increase in our mortgage payments has placed us in a challenging position. With the choice between a two-year fixed-rate deal and a five-year fixed-rate deal, each presenting its own advantages and drawbacks, we must carefully assess our options. By considering the long-term implications and seeking expert guidance, we hope to make an informed decision that aligns with our financial goals and secures our financial well-being.
