is Standard Variable Rate best for me?

waves117

Hi

i would appreciate your thoughts on my situation.

At the end of september 2008 my A & L fixed rate mortgage comes to the end. i revert to SVR (monthly interest). i will have £20,000 mortgage which i figure i can pay off within 2 years.

i realise SVR is not the best rate but changing mortgages would incur other costs (product fee etc) that may well be more expensive than the extra interest.

any thoughts would be appreciated,

happybroker

I can't see much benefit in you switching....nice position to be in though eh?

waves117

Thanks for your reply

yes "nice position to be in" but still looking for those money saving oppurtunities.

herbiesjp

If you can find a totally fee free mortgage on a far lower rate it could just work out better, but don't forget to take into account the exit fee for leaving A&L

missile

It may be worth speaking to a no fee independent mortgage advisor

UK007BullDog

Depending on the lender go for one of their fee free deals if they have one. Better that SVR. Or with their lowest fee deal.

Its simple to work out, interest rates guessed:

£20K x 7.89% = £1578 per year interest only.
£20K x 6.50% = £1300 per year interest only.

Saved £278 if the chosen deal is a 3 year fix you would save £834. So if the deal costs you £500, you would have saved £334 over the 3 years in total.

So you do your maths, how long you want to fix, when does your mortgage end? If you are overpaying a lot then ensure the fixed deal will not be too long. If going with a tracker it makes the figures a bit more unreliable, as rates can go up as well as down.

As Herbie says, dont forget to figure in the leaving fee if you were to remortgage to a new lender.

UK007BullDog

missile wrote: »

It may be worth speaking to a no fee independent mortgage advisor

That figure is too low to interest a broker, time taken to find a deal, paperwork, phonecalls, the commission is so low they wont waste their time or will pawn it off to one of their trainees.

And most lenders have a minimum amount of around £25K. Some do 15K. But its not worth the agro. Just stick with current high street lender and ask for their best deal.

waves117

Thank you all for your response

To summerise
Mortgage exit fee £295, only need deal over 2 years, not enough commission in it for a broker, mortgage amount too low for most lenders.....guess i will have a browse around for a fee free deal and do my maths before i deciede what to do and think myself lucky the mortgage is nearly paid.

thanks again

herbiesjp

waves117 wrote: »

not enough commission in it for a broker,

Sorry but this is wrong and would be a short sighted view by a broker IMHO

Any broker worth their salt will have clients with high mortgages and clients with low mortgages.

Whilst I agree most will turn up their noses, their are plenty brokers they will still help - as it is a way of building up a relationship and potentially get referrals from that client

UK007BullDog

Well, since times are hard, you might get one willing to look, but most do charge a fee... so do figure that one in as well.

But you will probably find that best deal is to stay with present lender.

If you can afford it if you overpay you might be mortgage free much sooner!

herbiesjp

UK007BullDog wrote: »

Well, since times are hard, you might get one willing to look

Nothing to do really with hard times.

Everything to do with good business sense

Even if it is done fee free by an adviser (as a loss leader) thre is potentially one extra person out there who will be happy with your service and spread the word!

How many doors could that then open? And what would be the reward?
Far more than charging a fee for on a £20k mortgage IMHO