Am I understanding this right?!

thetigerwhocametotea

House value = £500,000
Outstanding mortgage = £222,000
Time left to run on mortgage = 20 years
Lender - West Brom B Soc

Currently have 3 yr fixed rate of 2.99% (yes that's 2.99%!) which ends in March and small print says "after 31 March 2009 your loan will revert to a variable rate which is the same as the Bank of England Base rate with a premium of 0.99% until the term end. Any changes in the base rate throughout the remaining term of your mortgage will be applied to your account on the first day of the month following the change".

I'm therefore presuming we'll revert to a tracker at 5.99% (base rate plus 0.99%) at the end of March and stay at that unless the base rate changes.

Is it worth looking for a better deal seeing as we have less than 50% LTV or is this one pretty good seeing as no fees etc?
Do we want to be tied for 20 years?
Is the base rate likely to go up?

So many questions! All advice greatly received.

dimbo61

yes you are right 5.99% tracker so a big 3% jump for you in March
Can you afford the extra if the BOE rate went up to 6/7/8% ?
Would another longer term fixed rate be better as this gives you security of what is a big mortgage for the next 20 years.
You are not tied as you will go onto this tracker and can ( if no ERC ) move to another lender.
With a £220k mortgage and 50% equity there should be good fixed rate deals available to you but a little early to look. GOOD LUCK

koexelek

I would think that at a rate of 2.99%, they would insist that you stay with them on the variable rate for a couple more years, to avoid having to pay an early repayment charge ?
Can't ever remember seeing that sort of rate on offer from any lender in recent years without an extended tie in.

I'm only guessing though. Best to check the terms of your original offer.
However, if you do have to stay with them a bit longer 5.99% is still a pretty decent rate in this day and age.

thetigerwhocametotea

Nope, I've checked, no early repayment charges just a £200 mortgage exit fee.

The mortgage was a special deal on a new house through Charcol/West Brom and the builders.

Do you think we'd be better fixing for a couple of years? - we couldn't afford the repayments if the base rate went much higher than it is now, but some of the fees to re-mortgage seem extortionate.

When would you recommend we start looking for a new deal?