Remortgage Rate 4.5% over 3 yrs or 4.99% over 5 yrs

Aidy

Bit of a crystal ball one this. My current 5.2% fix is about to end. I have been offered a 4.5% 3 year fix or a 4.99% 5 year fix by my existing lender as enticer products. Both are good rates, and I avoid the hassles of switching lenders, but what do you reckon - gamble the lower rate for 3 years and hope good rates are around in 2012, or play it safe for the next 5 years ... and then see what is about!!

Cheers

Aidy

Any thoughts anyone??

dimbo61

What does your mortgage revert to once your fixed rate ends ( on the terms and conditions letter ! )
It might be a tracker or the lenders SVR which might be cheaper !!!

Wolverine77

Its really your call!!

I feel that Mortgage Rates will get better over the coming months (HSBC 2.99% Fixed but 40% deposit) its a start. My Mortgage is interest only and is 0.54% above base rate until Oct this year and it jumps to 1.99% above base still good in the current climate.

If you can it would maybe be good to go for the 5 year deal as it is fixed for 5 years and you know what you will be paying!!

2010 - early 2011 you may see some recovery in the market and I feel the interest rate will increase but its the BOE who decide this and after all who are we only the people who saved the banking industry!!

Aidy

dimbo61 wrote: »

What does your mortgage revert to once your fixed rate ends ( on the terms and conditions letter ! )
It might be a tracker or the lenders SVR which might be cheaper !!!

Hi

Reverts to SVR which is currently 4.99% (not yet reduced after latest cut, so will probably be 4.49%.) Did consider this gamble as well, and stay on SVR a while then jump back on a fixed when the SVR starts moving up; but then the fixed rates may jump up when I decide to fix!!

Probably will play safe on the 4.99 5 year fix - as Wolverine77 says; this will guarantee my payments for the next 5 years, and then see what state the financial world is in then - perhaps we'll be out out recession!!

Limey

In the same predicament Aidy (don't own a Mitsubishi Evo do you?) with a choice between 3 and 5 year fix at similar rates.

Thing is that even if the BOE rate goes down it's up to the banks to pass them on and I doubt that they will do this, especially with the fixed rate mortgages.

ceepee1

Id be inclined to look at tracker rates rather than fixed at mo. rates you have suggested are higher than lots of standard variables at moment. if you going to tie into any period I think 5 years too much given current sporadic economy. go see an IFA.

udydudy

IMHO, personally I would not look at fixing at these rates, especially if there is a booking/arrangement fee involved. if it is without a fee then it may be worthwhile. but i would rather move over to the SVR which in all probabilities is the same or lower than the fixed rate products. I am on 0.21 below BoE upto August and am planning to move to SVR unless 5 year fixes are available then at or below 4% with a small fee.

Many lenders will announce the latest SVRs going into February. I expect further rate cuts going forward and rates in all probablities may start to rise only early or mid 2010.

So I would consider it to be safe to move to SVR and decide more towards summer 2009 when BoE rates could be as low as 0.5%. I prefer to look at US rates to help decide whether our rates will go up or down in this climate. we sort of lag the US economy by around 6 months.

but then it is ofcourse the BoE who decides the rates, all of us can only guesstimate.

mpoocat

The answer to this questions begns with a question. What is the loan to value ratio (i.e what do you owe as a % of the current value of the home). If the LTV is higher than 75% now I would fix at the 5 Year. If its 75% or below I would stay on the lenders SVR until you get closer to the 75% theshold. proving the LTV is sub 75% stay on the variable for the ride then fix later this year. LIBOR is falling so fixed rates will fall further.

The answer is in the question - what is the LTV

Aidy

mpoocat wrote: »

The answer is in the question - what is the LTV

I reckon about 70% - it is hard to value your property at present as nothing around is selling!!

stolt

what is lowest SVR that is currently out there at the moment