end of fixed rate- what do I pay?

jebervic

my mortgage terms state:

This condition applies to product Q5RM. from the day we make the loan up to and including the 30th day of november 2009 the interest rate we charge will be fixed at 5.69%. after that, the interestb rate we charge will track the base rate for the remainder of the mortgage period at a fixed differentialbof 1.75% above base rate.

the document explains

base rate means the repo rate charged from time to time by the bank of England or (if the repo ceases to exist ) any rate which we substitute for it under condition 6(s) of our residential mprtgage conditions.

_Andy_

If you ring your lender they will clarify what the payments will be.

withabix

They will send yo a letter at least 1 month before your fixed rate ends, advising you of what your payment will be.

If the base rate remains at 0.5% and you are on a repayment mortgage and have no arrears or added fees, then the monthly payment should be approximately

(1/12*2.25/100*outstanding debt) + (1/12*1/[number of years left on mortgage]*outstanding debt)

ie (1/12 of annual interest) + (1/12 of one year's capital repayment)

opinions4u

jebervic wrote: »

my mortgage terms state:

This condition applies to product Q5RM. from the day we make the loan up to and including the 30th day of november 2009 the interest rate we charge will be fixed at 5.69%. after that, the interestb rate we charge will track the base rate for the remainder of the mortgage period at a fixed differentialbof 1.75% above base rate.

the document explains

base rate means the repo rate charged from time to time by the bank of England or (if the repo ceases to exist ) any rate which we substitute for it under condition 6(s) of our residential mprtgage conditions.

Sounds like you're tracking at 1.75% above BofE rate of 0.5%. So your new rate is 2.25%.

Assuimng your mortgage conditions allow it, I'd take the opportunity to overpay and chip away at the overall debt.

While it is inevitable that BofE rates will rise at some point, that may well not begin until well in to 2010. And you need a 4% rise to put you in a position similar to the rate you've just been paying.

If you are uncomfortable with the risk of rates rising, your lender may have a range of fixed options or you could consider remortgaging. Take a look at www.moneyfacts.co.uk to see what other deals are out there (perhaps post who your lender is, how much you owe and how much your house is worth).

But I'd try to retain my current payment to get the debt down, and take the 2.25% SVR which sounds superb!

withabix

opinions4u wrote: »

Assuimng your mortgage conditions allow it, I'd take the opportunity to overpay and chip away at the overall debt.

At 2.25%, I would only do that if I couldn't find savings accounts which offered more than that after tax and also if I'd already invested the maximum in this year's best available ISA.