Worth buying out of fixed rate?

azwebservice

Hi, Im after advice on whether its worth buying out of our fixed rate mortgage to benefit from the rate cut.

Currenct Mortgage - £93000
3 years fixed at 5.49% left - 3% fee to leave

I would go to HSBC's variable rate which was 3.94 until todays cut - they haven't published the new rate yet.

Any advice most appreciated!

Cheers
Peter

Aztecsilver

I'm in the same situation, fixed for another 4 years at 5.6% which I can afford to pay, but when I hear my friends talking about how they are saving hundreds a month on their payments, as they are no longer fixed, it is very upsetting.

I wish I had been a bit more of a risk taker now, but as a single person living on their own I was more interested in security and the advice giving by the mortgage advisor at the time.

bluewire

How many years are you paying over and how long do you have left on the fixed rate?

If you are paying the 93000 over 25 years you would be looking at monthly payments of £570.55 (ish)
if you were paying this at 4.94% you would be paying £487.81 (ish)

Saving 2978.41 over 36 months

Cost to leave £90000 x 3% = 2790

Savings £188

Would you also have to pay any search/valuation fees???

Not something I would think of at this time (if the base drops by another 0.50% ok an extra £908

These are all "ish" figures

Rossa_3

On top of Bluewire's figures is there an arrangement fee for the HSBC offer? It may wipe out any savings.

Also what is your LTV? Have you had your house valued recently to know where you stand with equity. The lower your LTV the better the deal you should be able to get. Though you must remember that market value and a valuation for mortgage purposes are not the same. In a falling market, surveyors are building in a "loss" factor when they value houses for the lender to take into account that the market looks like continuing to fall and the lender won't want to risk you going into negative equity.

Your fixed rate may seem high at the moment but at least you know exactly what you are going to pay for the next 3 years and by the time it ends, rates may have gone up and you could be sitting there thinking your rate is cheap again. IMO stay with it if you can afford to.

beecher

Aztecsilver wrote: »

I'm in the same situation, fixed for another 4 years at 5.6% which I can afford to pay, but when I hear my friends talking about how they are saving hundreds a month on their payments, as they are no longer fixed, it is very upsetting.

I wish I had been a bit more of a risk taker now, but as a single person living on their own I was more interested in security and the advice giving by the mortgage advisor at the time.

Your friends might not be so noisy when they're paying hundreds of pounds more on their payments. You know what you're paying for the next 4 years - they don't have a clue how much they might end up paying. Be thankful for the security, and switch off from the boasting would be my advice.

uzubairu

beecher wrote: »

Be thankful for the security, and switch off from the boasting would be my advice.

100% in agreement.

If you have that kind of money to pay in fees, why not overpay the mortgage and save money that way.

puddy

well im on a 10 year fixed at 4.98, im only 2 years in. i hear all this stuff about low rates, someone at work was going on about only paying 1.5% and of course i wish thats all i was paying but i also know that in 6 months time, he could be on 5% and i will still be paying what im paying now, no messing about having to rebudget each month, no worrying about rates going up to double figures in a years time, no panicking about getting on another fixed rate when i see rates rising and paying a huge arrangement fee for the privilage

uzubairu

jenner wrote: »

well im on a 10 year fixed at 4.98, im only 2 years in. i hear all this stuff about low rates, someone at work was going on about only paying 1.5% and of course i wish thats all i was paying but i also know that in 6 months time, he could be on 5% and i will still be paying what im paying now, no messing about having to rebudget each month, no worrying about rates going up to double figures in a years time, no panicking about getting on another fixed rate when i see rates rising and paying a huge arrangement fee for the privilage

Same here.

We have been able to focus on overpaying and reducing the term of the mortgage, because we don't have the faff of having to rebudget each month.