The "Should I Ditch my Fix?" Calculator Discussion Area

Stumpi

Hi All,

This is my first post so forgive me for getting stuck in straight away!
I'm currently in a fixed rate deal at 6.15% until feb 2011 with interest only monthly repayments of £834.

I've just been looking around at available rates and it seems a repayment deal is available at 4.24% which means I'd be paying just £839

Looks like a no brainer on the face of it right? Well having just phoned my lender BOS, they tell me I'm locked in at this rate until Feb 2011 and that if I wanted out I'd have to cough up just short of £8k!!!

I feel a liitle hard done by here, and also fel trapped with this deal as they say if I want to switch I have to pay the buy out fee up front, which of course I can't.

Is there anything I can do? Any advice would be grately appreciated.

David.

dunstonh

I'm currently in a fixed rate deal at 6.15% until feb 2011 with interest only monthly repayments of £834.

I've just been looking around at available rates and it seems a repayment deal is available at 4.24% which means I'd be paying just £839

You have done a typo. The fixed rate is cheaper than the alternative rate figure. £834/£839

Well having just phoned my lender BOS, they tell me I'm locked in at this rate until Feb 2011 and that if I wanted out I'd have to cough up just short of £8k!!!

Quite logical and to be expected. Nothing wrong with that either.

I feel a liitle hard done by here, and also fel trapped with this deal as they say if I want to switch I have to pay the buy out fee up front, which of course I can't.

Why do you feel hard done by? You chose to go with payment security. You were unlucky that the rates have gone down but would you be complaining if the rates had gone up? Thats the gamble you take with a fixed rate. You do it for security not whether its cheaper or more expensive.

Is there anything I can do?

Nope. Your choice is to stick or pay it.

Gorgeous_George

One is 'interest only' and the other 'repayment'.

Other than that, I agree with all of dunstonh's comments. The banks are NOT our friends - they are in a money making business.

You should be overpaying as much as possible and keeping your fingers crossed that rates will not rise dramnatically by 2011.

GG

CAVEMWYNKEY

hi (noob) bit confused by all this ,so here goes. i`m currently paying approx 550 a month interest only runs ou march , looking to get a new mortgage should i go for fixed or tracker. i am looking either to pay less per month or start paying off mortgage for not much more per month any feedbak is gratefully recieved:beer: cheers

MarkyMarkD

The choice between fixed and variable is primarily down to certainty. It may be more expensive - at the outset - to fix, but the benefit is that your payments will not increase beyond your means.

All things being equal, both fixed and variable rates (best buys) will give the same cost over the same term. But that's only if (a) the banks' forecasts and the money market's forecasts of rates are right; and (b) the level of competition on fixed and variable rates is the same.

Normally neither (a) nor (b) is true!

jimthefish

Hi there.

I took out a 10 year fixed in April 2008 at a rate of 5.15%.

So i'm about 2 years 4 months in with 7 years 8 months left.

Amount outstanding is £115k and a have a LTV of 44% so can get some good deals.

I have a early repayment fee of approx £2300.

The calculator states that i need a rate consistently below 4.79%, that rate is obviously widely available at the moment. In fact my existing lender is offering me tracker rates at both 1.99% and 1.79% over base rate (terms differ very slightly).

What i am thinking is that obviously in years one and two my savings could be fairly substantial, even allowing for the early repayment fee. I'm maybe asking an impossible question, but really my only thinking now is if the gains i will make in the early years will be worth it when in the later years of what would have been my 10 year deal the interest rates will probably have risen?

I hope you understand what i mean, and would welcome any feedback.

Thanks.

jimthefish

Anyone got any views on my previous post above?

Bath1865

Market expectations would currently suggest that if you managed to secure base +1.79%, you shouldn't be paying 4.79% for another 3 or 4 years.

We are in volatile economic times however and who knows whether this prediction is right.

The decision also depends on how long the total term of the mortgage is (this determines the sensitivity to interest rates), arrangement fees on the new product and whether you would be overpaying while your payments are low.

MarkyMarkD

jimthefish Whilst your existing lender may be offering the tracker rates you mention to new borrowers, it will probably not allow you to pay an ERC and switch to them. It is not required to do so - the ERC is the price you pay for the option of redeeming, and doesn't guarantee any option to switch products.

mortagemad

Hi

Does anybody know whether you have to pay these up front, or whether they are added to your outstanding mortgage loan?

Thanks