A little assistance required

ajtrader100

Hi all,

I currently have afixed mortgage with A&L, at 4.89% (which wasn't too shabby at the time)

It come to an end early next year, when it finishes it goes to a new rate of 0.75% above the Bank of England rate. Do you think that rates will continue to stay relatively low for a while? Should I just let the fixed term end and them start overpaying the mortgage by using the new lower percentage rate (which if it stays as it is now at 1.25%)

or

Should I look for another mortgage? Any advice would be welcome. I have oly been on the property ladder for 4 years so still very new to this, any recommendations would be welcome!

Thanks in advance for your help!

opinions4u

Stick with what you've got.

Base rates have got to go up a hell of a lot to make moving elsewhere a good idea.

Reviw the situation in November though.

Assuming you do go on to the BofE + 0.75% tracker and benefit from a significant fall in payments I'd suggest using some or all of the savings made to either overpay your mortgage and reduce the debt or build up some savings to help you cope with higher payments if BofE rates do get away from you!

ajtrader100

Cheers,

Thats what i would want to do, I just used the EGG mortgage calculator and if I over pay the diifference it would knock 6 1/2 years off the mortgage.

So Do you think that the boe rate will stay low for a while?

opinions4u

ajtrader100 wrote: »

So Do you think that the boe rate will stay low for a while?

What I think may not be what will happen.

Using the Opinions4u crystal ball, I'm going for:

31st December 2009: 0.5%
31st December 2010: 2.5%

I think there's lot of life left in this reession yet, recovery will be slow and the neessary tax rises will ensure their is no overheated recovery, limiting the need for significant rate rises.

If you'd asked me a year ago what the rate would be at 30th June 2009 I'd have said 5.5%. Eleven times isn't far off is it?

ajtrader100

Superb, I am not at all educated in the economic situation, which is why I ask for ideas and theories by those a little more in the know than me!

God knows what my crystal ball would say!

If I decided to carry on with this mortgage, how much notice would I have to provide before switching? For example if the rate increase happens quicker than you predict, how quickly could I 'get out' of my current deal?

Peelerfart

Imagine the queue if a bank offered BofE + 0.75% tracker !

Peelerfart

As a small aside ,slightly off topic can I ask how reliable has the "Opinions4u crystal ball" been over the years ,
on a scale of one to ten and would MrsOpinions4u agree ?
:rotfl:

PF

opinions4u

Peelerfart wrote: »

As a small aside ,slightly off topic can I ask how reliable has the "Opinions4u crystal ball" been over the years ,
on a scale of one to ten and would MrsOpinions4u agree ?

Put it this way, even if I was absolutely spot on, Mrs O4u would be sure to say it was down to her!

The crystal ball scores a 6. That means I guage it as marginally better than guesswork.

My financial wellbeing is more down to good planning and contingency than it is to good forecasting.

If you plan for the worst, you're always going to be better off if the worst doesn't happen!

My key prediction - there will be another recession in the future. That one I will get right.

poppy10_2

opinions4u wrote: »

What I think may not be what will happen.

Using the Opinions4u crystal ball, I'm going for:

31st December 2009: 0.5%
31st December 2010: 2.5%

I'd say 1.5% and 8% respectively

ajtrader100

poppy10 wrote: »

I'd say 1.5% and 8% respectively

Seriously? That would become a very expensive mortgage then! I will have to estimate when to change the mortgage if there is a sudden increase in base rate!

Muhasib

poppy10 wrote: »

I'd say 1.5% and 8% respectively

you really think there will be rises of average 0.25% in each of the next 4 months?
I take it you don't read the minutes from the Bank of England Monetary Policy Committee: 'Market expectations were for Bank Rate to remain unchanged at 0.5% for the rest of 2009, but for an increase beyond that horizon to around 1.5% by the middle of 2010.'

For interest rates to rise substantially the programme of Quantitative Easing would first be suspended, this has just been extended by another £50bn so the B of E is not seeing that a rise in inflation is more likely at present above 2%, hence interest rates at the current low levels. I'm not saying I agree with the policy but that's what is really happening.