NR fixed rate ending..advice pls

mrnicknick

Hello,

I'm looking for some advice on what the best thing to do is when my NR fixed rate ends.

My fixed rate mortgage Northern Rock deal comes to an end on the 1st March 09 and I’m considering getting an offset base rate tracker with First Direct.

The FD deal tracks the BoE base rate at 1.89% above which is currently at 2.89%. I haven't got any savings to speak of and my LTV is 79% (house value 135000, loan required 106000).

My current NR fixed rate with NR is 5.69% (£720pcm) and I will automatically drop to 5.09% (£680pcm) on the first of March.

My intention is to get an offset mortgage, try and overpay. My OH and my wages will be paid into the FD account and i intend to use a credit card for living expenses which I’ll pay off at the end of every month so that i can offset a much as possible.

My concerns with taking the FD deal are:

1. They take 10-14 weeks to process the mortgage (do they take this long when moving from them or to a fixed rate if the interest rate rises)
2. The product fee is £799 which will be added to the mortgage which effects the overall rate (but I’m not sure by how much - I’ll be able to overpay whist the rate stays low but for how long? will it be beneficial?).
3. Worried about my house price falling any further resulting in my LTV rising thus preventing me from getting a good fixed rate deal should the interest rate rise. (especially the case if I do nothing and go on NR’s SVR @ 5.09%)


Alternatively, I could opt for a fixed rate of 5.24% but this can’t be the best thing to do if I want to pay off the mortgage early (currently 21yrs left) and when base rate is 1% and there’s talk of it dropping further!

I’ve briefly consulted the recommended mortgage brokers from NR and the best fixed rate deals they can get for my LTV were around 5.6%.

There must be others in my predicament so if you have any advice you can offer or could just offer some useful advice for my situation, it would be gratefully received.

Nick.

beecher

Doesn't the LTV have to be less than 80% with First Direct? If so I'd be very concerned about how close you are to the threshold and how confident you are a valuer will value your house at £135,000.

As you say, this also means your chances of jumping onto a good fixed rate when the tracker starts increasing are lower. You need to work out if you'd be able to overpay enough to keep your LTV steady. I'd be tempted to get a long fix while you can, and overpay - but I'm extremely cautious.

mrnicknick

Thanks for the advice beecher.

I had an estate agent value the house but i might get another before i potentially waste the £160-£200 valuation fee required by lenders.

I think you're right about the fixed rate as i too am extremely cautious but was being drawn in by a. the offset method and b. the 2.89%.

I think maybe I’ll see what fixed rate offset deals are available to me and get another estate agent out to value the house. I really don't want to rush into a decision without considering all of the options open to me but it seems i might not have a choice with my LTV being what it is and the house prices falling.

Also, although the 2.89% offset deal sounds great, the product fee is £799 and I’m not sure if that would be such a great deal especially if i don't stay with them for long.

Trying_to_be_good

An estate agent's valuation is vastly different to a surveyor's valuation. THey may have given you a marketing price (i.e. asking price) rather than a quick sale price/realistic valuation. Do you know of any comparable properties that have sold recently? That may be the best guide. You are really very close to the 80% cut off.

You can overpay with most fixed rates, often 10% of the balance each year, or up to £500 a month. You seem to want to overpay rather than make use of the offset (other than delaying one month's payments by putting them on credit card), so look into overpaying on other (cheaper?) deals.

Good luck.

kazd

I think you will find that your rate drops to 4.79% which is NR SVR

mrnicknick

Trying_to_be_good wrote: »

Do you know of any comparable properties that have sold recently? That may be the best guide. You are really very close to the 80% cut off.

You can overpay with most fixed rates, often 10% of the balance each year, or up to £500 a month. You seem to want to overpay rather than make use of the offset (other than delaying one month's payments by putting them on credit card), so look into overpaying on other (cheaper?) deals.

Good luck.

Thanks for your reply. I'm hoping that when i pay the lender for the valuation the LTV won't be too far from 80%. If it's slightly over, i'll try and borrow the extra from somewhere to get the better deal. I do want to overpay over making full use of an offset (as i have no savings), but as for cheaper deals, the cheapest i can find is 2 yr fixed rate 5.24% with First Direct.

Does anyone know of a better fixed rate deal for 80% LTV, which is 2 yrs or more?