Fixed rate or not

wends01

Hi,After some advice, currently comming to the end of a fixed tracker rate with the nationwide and we will revert to the 2.5% variable, house is worth £220,000 with £66,400 still owing so ltv is really good, we are consdiering fixing with RBS 4.99% for 5 years £299 arrangment fee, would we be mad?, on the 2.5% we will be able to overpay by a least £300 a month whereas the RBS mortgage would double the amount we are paying now so wouldn't be able to over pay as much, opions please though i do realise nobody has a crystal ballthanks in advance

nesssie1702

Hi there, in similar position to you with the Nationwide and was thinking of going to RBS as well! I'm having doubts too.....

I'm tending favouring going onto the Base rate and overpaying. How long do you have left to pay on your mortgage?

TeddyBear_2

wends01 wrote: »

Hi,After some advice, currently comming to the end of a fixed tracker rate with the nationwide and we will revert to the 2.5% variable, house is worth £220,000 with £66,400 still owing so ltv is really good, we are consdiering fixing with RBS 4.99% for 5 years £299 arrangment fee, would we be mad?, on the 2.5% we will be able to overpay by a least £300 a month whereas the RBS mortgage would double the amount we are paying now so wouldn't be able to over pay as much, opions please though i do realise nobody has a crystal ballthanks in advance

On the subject of arrangement fees, £299 is not bad at all, considering I've known the Nationwide's to be anything up to £2,000. The arrangement fee is only one factor and my view is the lower the fee, the more the lender knows they will make their money out of you on the actual deal itself.

I do, however, feel that any arrangement fee approaching or more than £1,000 is excessive, as, why should it cost that much to arrange a mortgage, and why should that cost vary between one product and another? Before you come to a decision, you need to compare mortgages and work out the actual cost to change on each of them, ie the arrangement fee, other fees if any, the percentage rate of the deal itself and how flexible the actual terms of the mortgage are.

No-one has a crystal ball; that is true. However, from reading posts on this forum, others feel the same way as you and are contemplating a fixed deal in anticipation of interest rates going up. They are obviously going to start rising again, but after no change in interest rates, I wouldn't expect them to rise sharply *yet*, but mortgage deals change regularly so, not are you only having to speculate the trend in interest rates, but hope that the deal around today will still be around tomorrow.

opinions4u

I do, however, feel that any arrangement fee approaching or more than £1,000 is excessive, as, why should it cost that much to arrange a mortgage, and why should that cost vary between one product and another?

Lenders tend not to call them arrangement fees anymore. Product Fee, Reservation Fee etc are common terms. They're not fees for the setting up of the mortgage. They are fees for borrowing the money at a specific rate. Usually, the lower the fee the higher the rate.

The higher the fee, the less appropriate the deal is likely to be for a smaller size of mortgage.

I'd willingly pay a £5,000 fee if I was offered a rate of 0.1% fixed for 10 years on my £47k debt!

Before you come to a decision, you need to compare mortgages and work out the actual cost to change on each of them, ie the arrangement fee, other fees if any, the percentage rate of the deal itself and how flexible the actual terms of the mortgage are.

Spot on.

wends01

Hi,Thanks for all your replies, am leaning towards staying with the nationwide for the time being, we have 8 years left, and out of the £66400, £50,000 is still on interest only,we keep converting lumps of it to repayment, from what I can gather people`s opinions seem to be that interest rates won't rise too high within the next 18 months,