Coming to end of fixed rate - advice needed

alexpg_2

Hi, this is my first post here so please don't bite!

Almost two years ago I took out a 95% mortgage with Scottish Widows, fixed rate of 5.75%. I've now got about 90% left to pay, but reckon that my LTV is shot due to prices go down.

I assume that having such poor LTV means I've no chance of going to another mortgage company. Scottish Widows from their website only seems to do flexible mortgages for LTVs of less than 75% (I have nowhere near enough in savings to get down to this value).

What is the best plan of action for me? Whilst dropping down to the base rate of 3.99% seems attractive, I'm worried about rates suddenly rising. However, would rising rates mean more mortgage products become available? I would like to fix, as I'm also looking to get a new car, and would like a bit of financial security regarding mortgage payments.

Thanks in advance.

dimbo61

What happens to your mortgage after the fixed rate deal ends ?
Read the T & C,s of your offer ( paperwork)
If it does go down to 3.99% you are better off than you are right now.
Now if SW can and will offer you a new fixed deal for 3/5 years you would be wise to consider it carefully.
If not then overpay your mortgage with every spare penny you have then when rates do rise you wll not feel the effects so much and have paid a little bit of your debt off. GOOD LUCK

System

Phone them, a lot of lenders are allowing people to remortgage with over 100% LTV. The 75% deal you're looking at seems to be for new customers.

opinions4u

alexpg wrote: »

Almost two years ago I took out a 95% mortgage with Scottish Widows, fixed rate of 5.75%. I've now got about 90% left to pay, but reckon that my LTV is shot due to prices go down.

Probably right.

I assume that having such poor LTV means I've no chance of going to another mortgage company.

Right again.

What is the best plan of action for me?

Ring them to see what choices they can offer you. Although not intentionally, they've got you in a corner - you're stuck with what they can offer you. That may mean 3.99% and nothing else.

Whilst dropping down to the base rate of 3.99% seems attractive, I'm worried about rates suddenly rising.

Use the saving that this brings you to overpay your mortgage and bring your debt down, or to build up a savings pot that you ring-fence. The savings pot can then be used to subsidise higher monthly payments for a time should rates shoot up unexpectedly.

I think (but don't know) you've probably for 18-24 months before you see rates rising. Use this time to your advantage!

However, would rising rates mean more mortgage products become available?

No. Rising house prices would.

I would like to fix, as I'm also looking to get a new car, and would like a bit of financial security regarding mortgage payments.

What you would like and what you can get aren't always the same thing. I prefer the idea of reducing debt as this will give you more chance of changing lenders (to a more competitive option) in the future.

alexpg_2

Spoke to Scottish Widows today. They've calculated what my property is now worth, which is 5 k less than what I owe. Their fixed rates start at 85%, so unless I find a spare 18 k down the back of my sofas looks like I'm praying that rates stay low for the foreseeable future!

dimbo61

If you end up paying less each month when you go onto the SVR then overpay by at least the extra you are saving.
At the end of the day its a debt and the sooner repaid the less interest you pay.