What's considered a good mortgage rate these days?

Max_Headroom_3

I'm trying to help a friend who's looking to re-mortgage to get a good mortgage rate.

She's in a very strong position as far as a mortgage company would be concerned. Secure (public sector) job, 50% equity in her house, 2x salary needed.

She was looking at fixed rate mortgages but they all seem to be around 6% for five year fixed which seems a lot given current interest rates, plus set up costs are anything up to a thousand pounds!

She's thinking now of going variable and using the lower payments to overpay her mortgage whilst rates are low.

Thing is, I've no idea what constitutes an attainably low mortgage rate these days.

Any idea what she should be expecting to get?

And are Trackers better? (Never totally understood the difference between Trackers and standard variable rates, although I know I used to have a Tracker because it was cheaper).

All and any advice gratefully received.

Peelerfart

The BIG difference between trackers and SVR's is that with trackers the Banks/BS's have to follow the Bank of England interest rate (up and down)

and with SVR's - they don't .

beecher

What is her present lender offering? She should probably speak to them first.

5 year fixes were at 3.99% for her LTV, then 4.5% and I thought there were still some available under 5% but haven't looked for a little while.

Maybe rather than trying to do all the research on her behalf, you should just advise her to see a broker? It may well be a better option to sit on her lenders' SVR but I would be wary of advising her personally in case rates go up signifcantly and she blames you!

Jacka87

I am looking at 5yr fixes at LTV of 75%. I have foundmost to be between 5&6% I am currently considering 4 options, the rates are 4.99, 5.1, 5.1 and 5.39 but with different fees etc.

Considering the details you gave I would be looking at better rates than those as the ltv is lower, tho I would say that the fees can make a big difference. From my options the rate difference is 0.4% between top and bottom, the effective monthly cost difference is <£3 when you include fees.

Moral work out th real cost with fees etc, not just the headline rate!

Max_Headroom_3

Peelerfart wrote: »

The BIG difference between trackers and SVR's is that with trackers the Banks/BS's have to follow the Bank of England interest rate (up and down)

and with SVR's - they don't .

Ah, that makes sense.

So a Tracker has to follow the bank rate plus whatever the agreed extra percentage is, whereas SVR's can just be set at whatever the building society/bank feels like at the time?

Max_Headroom_3

beecher wrote: »

What is her present lender offering? She should probably speak to them first.

5 year fixes were at 3.99% for her LTV, then 4.5% and I thought there were still some available under 5% but haven't looked for a little while.

Maybe rather than trying to do all the research on her behalf, you should just advise her to see a broker? It may well be a better option to sit on her lenders' SVR but I would be wary of advising her personally in case rates go up signifcantly and she blames you!

She did tell me, but stupidly I've forgotten. I remember it didn't sound that good though. I've got a feeling it was about 4% but I'm not certain. I'll find out tomorrow when I see her and let you know.

She's well aware of the risk involved in not going for a fixed, but with rates of around 6% the interest rate would have to climb quite a bit to match that, and even then she'd have missed out on the savings in the meantime.

Max_Headroom_3

Jacka87 wrote: »

I am looking at 5yr fixes at LTV of 75%. I have foundmost to be between 5&6% I am currently considering 4 options, the rates are 4.99, 5.1, 5.1 and 5.39 but with different fees etc.

Considering the details you gave I would be looking at better rates than those as the ltv is lower, tho I would say that the fees can make a big difference. From my options the rate difference is 0.4% between top and bottom, the effective monthly cost difference is <£3 when you include fees.

Moral work out th real cost with fees etc, not just the headline rate!

The fees plus the higher rate is indeed why going the fixed route seems particularly expensive.

Ok so you know exactly where you're at for five years, but where you're at is expensive, both in terms of set up and interest charged.