Changing mortgage product advise please
Macgirl78
Posts: 31
Forumite
My 1.4% below base rate mortgage is coming to an end and i have today been offered a couple of new products. Because of the current climate i am unsure as to which would be better.
I apologise if this is somewhere else, please point me in that direction if the same question is discussed. Thanks.
The products are a tracker (Bank of England base rate) at 4.49% (at present) for 2 years with a fee of £899 that would have to be added to the mortgage as we don't have that kind of money lieing around. The other is a fixed rate at 4.49% for 2 years (fee £499), 4.69% for 3 years (fee £699) or 4.99% for 3 years (with no fee).
Obviously the tracker would be the better option at the moment as the rate is so low but when it goes up (which i think it inevitably will in the next 2 years) our payments will increase. But I am leaning towards the fixed rate at 4.49 for the 2 years, yes we would possibly lose out if the rate drops any lower (if the bank decide to drop it the same amount) but if it goes up then at least our payments don't.
We are also thinking of upping our monthly amount and shortening our term so a fixed rate sounds like a better idea. What do you think?
Thanks very much for any advice.
Edit: Am i not allowed to ask this kind of thing? Sorry i've not done this alot.
I apologise if this is somewhere else, please point me in that direction if the same question is discussed. Thanks.
The products are a tracker (Bank of England base rate) at 4.49% (at present) for 2 years with a fee of £899 that would have to be added to the mortgage as we don't have that kind of money lieing around. The other is a fixed rate at 4.49% for 2 years (fee £499), 4.69% for 3 years (fee £699) or 4.99% for 3 years (with no fee).
Obviously the tracker would be the better option at the moment as the rate is so low but when it goes up (which i think it inevitably will in the next 2 years) our payments will increase. But I am leaning towards the fixed rate at 4.49 for the 2 years, yes we would possibly lose out if the rate drops any lower (if the bank decide to drop it the same amount) but if it goes up then at least our payments don't.
We are also thinking of upping our monthly amount and shortening our term so a fixed rate sounds like a better idea. What do you think?
Thanks very much for any advice.
Edit: Am i not allowed to ask this kind of thing? Sorry i've not done this alot.
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Comments
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Hi there..it's quiet on the boards tonight as it's new years eve so loads of people not on line to answer you.
I'm no good at working these things out but have patience and somebody will be along to help you .0 -
You are most certainly allowed to ask this kind of thing, that's what this board is here for!
You might want to consider staying on your lender's SVR for a few months and wait to see if better fixed rate deals come onto the market if the BoE base rate goes down again. Depends, of course - who is your current lender, and what's their SVR.
People will be able to give you better advice if you can say what your outstanding mortgage balance is.0 -
Thank you both.
The SVR is 5.44 and the outstanding balance £78300 ish. The offer we're on ends in February.
Cheers0 -
Bump. Sorry really need help:o0
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are u currently with bank of scotland?0
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Bump. Sorry really need help:o
It's sounds as if yr quite cautious if that is the case, play safe and go for fixed. With a fixed rate yr allowed to pay a certain % each month/year, possibly an option rather than committing yourself to upping yr payment, has the same effect in the long run....and maybe consider a longer term than 2yrs
Sorry really need help:o[/quote]
If yr really concerned, why don't you have a chat with a mortgage adviser?0 -
Hi again Feisty1.
We are with Abbey and we are going to see an advisor but they aren't allowed to say definitively 'choice that one' are they?
We did ask what she thought and she said it depends on what our budget is but that seemed like a diversion tactic because it wouldn't matter how much money we had, we'd still want to pay the least possible, especially if paying more per month (because of the interest rate) didn't mean paying more off the mortgage.
We still plan to pay more than necessary off anyway, but want to keep the rates down.
Cheers0 -
Abbey's SVR is 4.94% now - I'd be tempted to stay on that for a while and see what sort of 5 year deals come up in the next few months. I'm doing something similar at the moment with my Halifax mortgage.0
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I agree with beecher. The fixes you've been offered aren't bad, but I think there's a reasonable chance of another BoE rate drop early this year, which means that there may be slightly cheaper fixed deals on the market in a month or two.
Don't wait too long, though, or expect fixed rates substantially lower than the ones you've been offered already - there is still a credit crunch and banks aren't going to be offering bargain basement fixed deals however low the BoE base rate drops. If I were you, if you get an opportunity for fixed deals about 20-30 basis points lower than the ones you mention above, I'd go for it.
I'd avoid the tracker with a £899 fee, though.0 -
Does your tracker have any charges for leaving it? If not you could do what I'm doing, which is to be on a tracker for the low motnhly payments, but be ready to jump on a fixed rate the moemnt things look like they're hotting up again.0
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