Confused about remortgage deals....please help

roger1980

Hi, you've probably read the same question millions of times, but I really need your help!!

I am at the end of my two year fixed with A&L, on 4.99. I was going through 0.99% above BOE with HSBC but my LTV came back at 67% which they would not agree to. I originally bought the property for 155k in april 2007 spent 15k on home improvemements and now the valuation came back at 150k

Anyway in the mean time, I have gone through a illustration with Woolwich who are offering 2.29 above BOE for the life of the term (25 Yrs). A&L are now also offering 4.69% fixed for 2 yrs then reverting back to standard SVR of 5.34 or 4.99% fixed for 3 yrs then reverting back to standard SVR of 5.34.

I dont know which is the best option, so any thoughts/opinions will be greatly appreciated.

Many thanks

_Andy_

Hi and welcome to MSE.

Your question is impossible to answer without knowing what's important to you - what I mean by that is do you need/want the stability of a fixed rate?

If you went for a tracker and the rates went up, would the payment still be affordable to you?

roger1980

If rates went up then I could still pay the difference, just meant that i would not be able to save my income for the future. Is it likely that rates would go up to 5.34% in 2 yrs time, given the current climate?

My concern is after the intital fixed period, if the svr is too high and i need to remortgage again, property prices drop even more, i am gonna find it hard to get a deal which allows me to budget all of my expenses.

I have no kids at the moment but we are currently thinking, so really not sure

dunstonh

I originally bought the property for 155k in april 2007 spent 15k on home improvemements and now the valuation came back at 150k

Which sounds about right. You bought a few months before the peak and the average drop is around 15% which in your case would be £23k. Your spending of £15k may or may not be on things which enhance the value and even if they did you would still expect to be lower. Also, averages mean some suffer greater drops, some suffer less.

Anyway in the mean time, I have gone through a illustration with Woolwich who are offering 2.29 above BOE for the life of the term (25 Yrs).

That doesnt sound very attractive.

A&L are now also offering 4.69% fixed for 2 yrs then reverting back to standard SVR of 5.34 or 4.99% fixed for 3 yrs then reverting back to standard SVR of 5.34.

Short term fixes could work out more expensive than a 5 year fix as you pay fees every time you change deal.

What is your mortgage rate going to be when the current deal ends? If its SVR or a tracker, it may be worth holding on to that for the time being and wait until the Spring. The markets are expecting the BoE to drop rates again and the deals could well get better when that happens.

roger1980

Hey thanks for all your prompt replies, really grateful

When i took the original A&L mortgage the SVR was due to be 6.94, i dont know what it is now.

Yeh i understand what your saying about short term fixes, the 2 yr deal is being charged at 299 whilst the 3 yr at 599

I just dont know whether to go for the tracker or fixed.