mortgage deal ending advice please

toria27

Hi all,

I am sure you all get sick of posts like this and I have tried to find information on here but am a bit lost now.

We currently have a 3 year fixed deal with C&G at 4.59%, went through a financial advisor and applications have been denied basically new lenders are saying we dont own enough of our home or earn enough to get a new deal.
(husbands income has dropped since initial mortgage)

Mortgage deal ends 30th Sept, we are having £30,000 interest only (can cover this when the time comes) and £138,500 repayment with roughly 20 years left. I have approached C&G and have been offered the following:

fixed rate
5.99 2 year £1995 fee
6.19 2 year £995 fee
6.35 2 year £495 fee
6.65 2 year no fee

Variable but tied in for 2 years?
0.69 over base rate £1995 fee
0.99 over base rate £995 fee
1.19 over base rate £495 fee
1.49 over base rate no fee

I know that payment are cheaper for the lower interest rates and even when taking into account the fees, but as we would be adding the fees on to the mortgage, surely we are just making our mortgage bigger all the time??

help please confused what to do!!! hope i have given all the information needed, and thanks in advance x

toria27

Anyone???? please

handful

Hi toria27

It's hard to advise you on this one as you are saying that other deals are not available to you due to wanting to borrow a higher percentage than is generally acceptable. Therefore, you only have the choice of the C&G deals which are hardly market leading. I know there are tracker deals around at base +0.79% with a £599 fee but if you can't get these due to the crunch you are in a similar situation to thousands of others. And trackers don't protect you from rises either.

The real issue is nobody can predict which way the next interest rate will move and opinions change on this almost by the day. Yesterday's inflation figures suggest that it could be upwards but by the same token, banks are now actively seeking new mortgage customers for the first time in many months and the libor rate is falling which could allow some downward pressure on the mortgage rates being offered to customers. The smart money says that a rate cut is unlikely before the end of this year.

I think you would have to base your decision on how much you can afford rates to go up in a worst case scenario and then either sit tight and hope they don't go above that or bite the bullet and pay an extortionate fee to fix and give yourself some security against a big hike.

My own opinion is that rates may go up by 0.25-0.5% by Christmas before dropping back next year in time for an election

Sorry for not being able to be more positive!

_Andy_

Impossible to say as you've not stated what your preferences are. E.g. do you want the stability/security of a fixed rate, etc.

toria27

thanks, for your advice.
We have decided to go for the variable rate 1.19% above base rate, our home is currently valued at £245,000 (had 2 people out this week) but the mortgage lender we initially went to did a desktop valuation of £220,000 which is why we had problems.
Thanksfully we can cope with an increase in payments at the moment, of course if the rates go up stupidly!!! then we will have to rethink things like most people our wages will only stretch so far.