Re-mortgage advice -fixed or SVR?

katja4

This is the first time I am posting and I would be grateful for some advice.

My 2 year fixed rate mortgage deal comes to an end this April. I am looking for a £97.500 mortgage and the value of the house is £130.000. Initially, I was thinking about a 5 year fixed rate as the interest rates are currently low so I thought it would be worthwhile in the longterm.

I spoke to a financial advisor and he recommended a 5 year fixed rated (4.99%) - the fee is £599 (Alliance and Leicester).

Following this, I spoke to another advisor who suggested that I would be better off staying with my existing lender (Nationwide) on SVR.

Any thoughts?

Thanks in advance,

Katja

beecher

I'd keep an eye on 5 year fixes and see if they get any lower. You have a few months til your deal comes to an end with the option of sitting on the SVR for a while if it comes to that. All just my opinion though - I'm hoping for a 4-4.5% 5 year fix which may or may not turn up. Seems a bad option to me to pick a fixed rate which is higher than the SVR when interest rates aren't heading upwards in the short term.

koexelek

katja4 wrote: »

I spoke to a financial advisor and he recommended a 5 year fixed rated (4.99%) - the fee is £599 (Alliance and Leicester).

Following this, I spoke to another advisor who suggested that I would be better off staying with my existing lender (Nationwide) on SVR.

Any thoughts?

Thanks in advance,

Katja

It's all down to personal opinion and preference ( no right or wrong answer) but I'd agree with the second adviser. The Nationwide rate will be lower than the fixed, and as you will no longer be tied in, you can quickly jump to a fixed if the rates do strart to creep up

avfcforever

Beecker and Koexcelek, if katja does sit on the SVR hoping that the rate will drop before fixing, if the house prices continue to fall (faster/more than the interest rate) will this not mean Katja comes out with a worse deal? I only ask as I am in a similar situation..

herbiesjp

It could do.

As it looks borderline 75% LTV currently

If prices go down further, the OP could indeed find themselves on higher deals with some lenders as they fall into a higher rate bracket.

However not all lenders operate the same tiers - so they may be ok with some lenders and not with others.

JayZed

My deal with Nationwide ends at the same time and I'm planning to stay on the BMR (SVR) for a while and see if fixed rates come down. The BMR is currently 3.5% and will drop in line with any further BoE base rate cuts, which appear fairly likely.

However, it's true that in your case there's a risk that falling house prices will push you into a higher LTV band, as you're currently right on the 75% threshold. This is assuming your valuation of 130K is accurate - what is that based on?

avfcforever

We've stayed on the SVR with Bank Of Scotland. Although it is a little cheaper each month, I'm constanly anxious about the situation. Especially as although the press are saying house prices are hitting the bottom, and are set to rise soon, although the Bank of England rate MAY not start going up just yet, we are going to be in the situation where the house prices (ours included hopefully) will start to go up, but before we can get a new fixed rate at current(ish) rates, the deals will go, or rates will go up and we'll be stuck on an increasing SVR..

Any ideas? What are others doing in this situation, and why?!