Do I take the 2 yr fixed rate or go onto Base Rate + 1%??? Help

herbiesjp · 24 February 2009 at 4:06PM

OP - you are currently borderline 75% LTV.

You are waiting to hear what the survey figures came back at.

Whilst the SVR rate is indeed good, you also have to look at the effect falling house prices will make on the mortgage deals available to you.

If prices continue to fall, then it will mean your LTV is increasing - this will mean falling into higher interest rate tiers with a lot of lenders.

So waiting and then thinking you can jump onto a good fixed rate may not be an option open to you, based on the LTV of your scenario

Make sure you look at all the options.

confused31_2 · 24 February 2009 at 4:21PM

herbiesjp wrote: »

OP - you are currently borderline 75% LTV.

You are waiting to hear what the survey figures came back at.

Whilst the SVR rate is indeed good, you also have to look at the effect falling house prices will make on the mortgage deals available to you.

If prices continue to fall, then it will mean your LTV is increasing - this will mean falling into higher interest rate tiers with a lot of lenders.

So waiting and then thinking you can jump onto a good fixed rate may not be an option open to you, based on the LTV of your scenario

Make sure you look at all the options.

house prices may well fall, but if rates go up they will still be in the same situation in 2 years time, house prices wont have risen in 2 years.

the op says they will save 195 pound a month, if rates stay as they are in 12 months they will have gained 2340 pound and the 549 pound reservation fee.

so if in the last 12 months they have to pay the svr rate goes up it would have to go up to 240 a month on top of what they will be paying originally, beofore they star to lose out.

2 year fixed deals are no good at the moment , in my eyes its just long enough to drag you into trouble and not long enough to drag you out of it.

thats why i said i would try and go for a 5 or 10 year fixed and i think in the next few months there will be some great deals.

wissychraddle · 24 February 2009 at 4:23PM

Thanks for all the advice guys - keep it coming, it's helpful to see your views...

The mortgage advisor is calling me back shortly I am going to put this to her, can't blame her for trying to get me a 75%LTV fixed rate, it's the safest option! I'd do the same if I was her... but I can't help looking at that £195 a month and thinking ££££ of saving!

Will keep you updated!

confused31_2 · 24 February 2009 at 4:42PM

All the banks are throwing 2 or 3 year fixed deals at their customers, i think its because a lot of them suspect rates will have gone up by then, or going up and then they can take you for more money.

Im with the nationwide and i was going to borrow another 55000 pound, but if i take it i will either go on a good long fix and if that is not available, i will pay the 999 pound fee for the 2 or 3 year tracker with switch and fix facility and switch to a long fixed when i see rates moving or a good long deal comes out.

i could get a 2 year fixed deal for a low fee i think its 299 pound but i would not want to be stuck in that now.

Your mortgage is relatively small anyway, just tell the fa you want something longer.

herbiesjp · 24 February 2009 at 5:06PM

confused31 wrote: »

house prices may well fall, but if rates go up they will still be in the same situation in 2 years time, house prices wont have risen in 2 years.

the op says they will save 195 pound a month, if rates stay as they are in 12 months they will have gained 2340 pound and the 549 pound reservation fee.

so if in the last 12 months they have to pay the svr rate goes up it would have to go up to 240 a month on top of what they will be paying originally, beofore they star to lose out.

2 year fixed deals are no good at the moment , in my eyes its just long enough to drag you into trouble and not long enough to drag you out of it.

thats why i said i would try and go for a 5 or 10 year fixed and i think in the next few months there will be some great deals.

I haven't told the OP to go one way or the other

My last words were:

Make sure you look at all the options.

The OP might be eligible for a 75% deal today.

However if they wait, and the house value at the time they look for a fixed rate deal means they are now at e.g. 85% - this would impact on the deal available with most lenders.

THe OP is saving £120 bewteen SVR and the fixed rate they are looking at. THe £195 is between the expiring rate and SVR

Personally I am in agreement that a longer term fix is a better option, with the proviso that it suits what the OP is looking for in terms of their future plans and needs.

However, in all honesty, the option will only be available once the survey comes back, as if it comes in too low, you will not have the 75% option anyway.

payless · 24 February 2009 at 5:16PM

IveSeenTheLight wrote: »

What I would look at is getting a mortgage approval.
I understand these are valid for 6 months.

Then you can sit on the SVR and if the rates start to rise, utilise the mortgage approval at the already agreed rate.

If you go through the 6 month validity without rates going up, then get a new approval to validate you for a further 6 months

I assume you mean apply / get offer ( rather than than just an agreement in principal) - as this would be needed to secure a rate - BUT be careful as offers sometimes only last 3 months , or the fixed product may have a drawdown date, + some deals now require non-refundable fees Or give the lenders rights to fees if deal is not used

confused31_2 · 24 February 2009 at 5:46PM

herbiesjp wrote: »

I haven't told the OP to go one way or the other

I didnt say you did, did you say it? or where did i say you did?

wissychraddle · 24 February 2009 at 5:49PM

Speaking with the MA, the surveyor valued at 120k!!

She states the deal now is 4.19% 75% LTV, fixed rate for 2 years @ £510 pm

Or a 4.34% 75% LTV, fixed rate for 3 years @ £523 pm

Obviously she is advising me of the safe route - stating that if I maintain my current mortgage and go on tracker, if house price falls I will then be ineligible for a decent rate having gone over the 75% LTV threshold and I will be back at square one!

I think I am going to go the safe route - but do I go for 2 years at lower rate or 3 years at slightly higher rate??

God, it's like Goldenballs this!?!

Fliss_M · 24 February 2009 at 5:59PM

If your sure about a 2 or 3 year fixed I would go with the 3, but a 5 would be better

wissychraddle · 24 February 2009 at 6:15PM

MA stated that 5 year would be more like 5% fixed rate, I think the lenders are thinking people will be making too much money from them in the long run!!!