6.19% Fixed Rate Mortgage - Move it?

shedmansmrs

The adviser I used last year rang to say we should move the mortgage. He suggested fixing it for 2 yrs on a tracker rate - so we would incurr an arrangement fee, plus his fee of £195 (won't be using him again based on what I have just read!) plus the penalty we would incur now.

The rate we are on at present is 6.19% fixed until May 2013. The LTV is 34%.

The penalty would be £3,600 which we do not have and would need to add to the mortgage of £71,000.

Any thoughts would be welcome

Thanks

PeteHi

looks like he is just touting for work.

I think the question I would be asking myself is, what do I think rates will do over the next few years?

I may seem like your saving money in the short term by switching, but If rates go back up to around 5,6,7% in the next 2 or 3 years - then you'll be worse off and have a higher mortgage.

I'm on a fixed deal too, but decided to just stick with it.

shedmansmrs

Thanks, you may be right!

_Andy_

His advice is dire - for one, the fees/ERCs, but mainly for suggesting you lose the stability/safety of a fixed rate. I would avoid at all costs.

smk77

How much will you save every month by doing this? I'm guessing about £150 a month (just a guess based on rough calc and the assumption that the tracker will be about 3%) so i'll take 24 months to pay back the additional money you've added to your mortgage (you supposed to pay off your mortgage and not needlessly add to it).

If rates go up in that period then you'll pay more.

People are calling for Fred Goodwin and bankers to go to prison because of what they've done to the banks. I think this mortgage advisor should join them because it's bad advice from idiots who have helped people buy houses they really can't afford.

woody252506

At the end of the day rates are only going to go one way. Yes at the minute they are low but if your comfortable with what your paying now why risk it to save a few quid short term.

HenryMungo

In a similar position.

Currently fixed at 6.35% until late 2010.

My mortgage is 115k

The HSBC are offering the 3.99% fixed for 5 years - with a 1k set up fee

The early redemption charges would come to just over 3k

I would save myself approx 130 pm so obviously it would take 23 months to pay the redemption fee, include the set up fee it goes up to 31 months -effectively half the period of the fixed rate.

while the set up fee has to be calculated as an additional cost I would have a set up fee if I was moving my mortgage at the end of the 6.35% fixed period.

The plus side as I see it is I have a low fixed rate for a long time with security, I also will pay 130.00 less pm - this includes adding the 3k redemption fee to the mortgage. I must admit I'm tempted to go for the 10 year deal with the HSBC at 4.98%

No one knows what interest rates will be when my 6.35% deal ends in late 2010, but at least with the 5 year deal I will be on a low rate.

The downside is the additional 3k redemption and 1k set up fee.

What do people think ? should I move or should I stay ?

HM

linsali

Hi

I think our position is even worse and feel like we are between a rock and a hard place. We have looked at various options but can't see any way out.
We purchased our house last August (2008) for £180,000 with a mortgage of £140,000. Second marriage, in our 50's and we were both starting again, so it's a ten year interest only mortgage at a rate of 6.14%. At the time we both had a decent salary so repayment wasn't a problem and we were advised that the mortgage rates would continue to go up (haha) so we should take out a two year fixed rate, which we did. At that point I still had a property to sell and was going to pay a lump sum off the mortgage when I'd sold. Our fault for not reading all of the small print but we then discovered that we had been misinformed by our broker and that we could only overpay by £500 per month.
No matter, we thought, we'll do that and invest the rest until the mortgage finishes and then take out another mortgage and use the money invested to reduce our mortgage payments.
Then of course, all hell broke loose and interest rates plummeted to almost nothing so our investment is proving not much short of useless and we are still paying 6.14% interest on our mortgage. Added to that my husband lost his job and has now been unemployed for 8 months and at age 56, despite applying for numerous positions every day, has not had so much as a sniff at an interview.
I am now paying the mortgage and all the additional bills from one salary and as we have investments my husband is not entitled to any benefits. This is a massive struggle and we are unable to end the mortgage because we would not qualify for another one with just my salary. We have decided to sell the house (if we can) and cut our losses. This means we will have to pay a mortgage redemption fee of nearly £3,000 which hardly helps our financial situation.
Having investments sounds great but they are not so much (£40,000) which if we had been able to pay off a lump of the mortgage, we wouldn't have and my husband would have been entitled to benefits. He has never been out of work before and I am so angry that he has been paying taxes for his entire life and gets nothing back. Sorry, on my soap box now. I know that there are many people in similar or more dire situations, about to lose their houses but I can see this happening to us if we are unable to sell and I would value any advice.
Sorry this is such an essay.
Many thanks.