Stay on Lender's Standard Variable rate - good idea?

dazbigg

:mad: Hi all. Our mortgage deal comes to an end in a few months and we will owe approx £46000. We are currently with Halifax on a tracker (base rate + 0.64%). The deal was for 3 years with a 10 year term. So we still have 7 years to go on the term. Quite a good one I know but I have a dilemna!!
We want to reduce the term to pay it off in 4 or 5 years and as we have a £500 a month loan coming to an end in September (hoorah!!) we are in a financial position to be able to do that.
BUT looking at the deals with Halifax at the moment we would be paying from £999 to £1999 for a deal which would only save us approx £15-£20 a month over 2 or 3 years. Not even saving the initial product fee!! The only "free" product they have is for LTV of between 75% and 95% - which we won't fall into!!!
To switch lenders at this point (with less than £50000 outstanding) may turn out more expensive according to some advice sites / forums. We are not tied in after the 3 years.
SO MY QUESTION IS...
Should I just stay on the Halifax variable rate (7% at the moment) and wait for any better deals to come along?
Yes 7% is a lot to be paying but as it is only over 4 or 5 years the total amount paid back at the end of the term would only be £56000 (at today's rates) as opposed to £59,900 over 7 years and £65000 over 10 years.
Halifax do charge to change the term but I don't know how much yet.
Any advice please? Anybody in the same position?

sdooley

Staying on the SVR at least has the advantage you can switch to another lender/mortgage at any time if a good deal becomes available. You could switch to a cheaper SVR, e.g. with Nationwide or HSBC, but you'd have to add up whether the survey fees etc made this worthwhile.

bubblesmoney

many banks dont charge for small overpayments like 10% of outstanding amount etc. see if that works out for u in any plan to exit quicker or atleast have much smaller outstandings

curlyboy

svr i wouldnt personally things are just going up and up

Tiddler_2

Staying on SVR may well be the right move - seeing as you could be paying £999 to reduce the interest rate to 6.35% or so on a 5 year fixed. I don't see rates getting any better for a good 12-18 months (if at all).

SVR does give you the flexibility to swap at any time in the future -alternatively if you want the security of knowing that your mortgage will definitely be paid off in the 5 years and stays within a set budget, you could change to a 5 year fixed and change the term to 5 years aswell

£46k over 7 yrs at 7% would be £695 pm to pay it off in 5yrs = £911.

On a 5 yr term every 1% change in rates would cost approx £22

£46k over 5 yrs at 6.35% would be £897 pm

so fixing would cost £15pm more over 5 years or £900 over 5 years, so if the fee was £999 and interest rates didn't change upwards in the 5 years it would cost you around £99 more to have the fixed option.

beecher

curlyboy wrote: »

svr i wouldnt personally things are just going up and up

With such a small mortgage, it doesn't have such an impact though - every 0.25% increase costs less than £10. Over the term it takes a few rises to make paying huge fees worthwhile.

Halifax told me it costs £10 to change the term of your mortgage, though keeping the term and overpaying might be an option.

Halifax have changed their deals 20 times since January, and at some points have made deals more attractive to those with low mortgages. Here's hoping their next change gives you something you could snap up, but as you say the fees being charged make it less likely to be worth it.

happybroker

Halifax are advertising a 5 year retention rate of 6.49% with no fees and allows 10% overpayments. The maximum ltv is 75%, perhaps this is exclusive to brokers if they didn't tell you about it.

Good luck

paula7924

happybroker wrote: »

Halifax are advertising a 5 year retention rate of 6.49% with no fees and allows 10% overpayments. The maximum ltv is 75%, perhaps this is exclusive to brokers if they didn't tell you about it.

Good luck

I can't see that on their website - is it branch only?

happybroker

Trigold sourcing system

dazbigg

paula7924 wrote: »

I can't see that on their website - is it branch only?

Thanks everybody,
Just looked on Halifax website. It is now appearing on there. I will have to contact Halifax to see if I can do a 5 year product over a term of 5 years also. Or do I have to go for the deal that covers the "whole of term"???

happybroker

dazbigg wrote: »

Thanks everybody,
Just looked on Halifax website. It is now appearing on there. I will have to contact Halifax to see if I can do a 5 year product over a term of 5 years also. Or do I have to go for the deal that covers the "whole of term"???

Don't quite follow your question, do you mean a 4 year mortgage with a 5 year product, if so i doubt they would do that, or a 5 year product on a 7 year term, if so that would be fine but you may be limited to the amount of overpayments you can make.