Can any mortgage experts help me please?

mad__money_2

Our current mortgage deal is up on 1st October, it was a 5yr fixed rate at 5.75% so I've been onto our lender to see what they can offer us.

The options are:

2yr fixed rate at 3.74%
5yr fixed rate at 5.05%
10yr fixed rate at 5.53%

or

2yr variable which is 3.74%

HELP!!!

Any advice appreciated, thanks!

DJ_Mike

Did they tell you what fees there are for each of these? Also what is the SVR of each mortgage once the initial deal (2/5/10years) ends?

At a glance, the 2 year fixed rate seems very good but only if the fees aren't extortionate.

How much are you looking to borrow?

mad__money_2

fees are £395 for all apart from the 10yr one and they are £995. Their SVR is currently 5.79%

We owe approx £65k and were maybe hoping to add on £20k (credit card and loan debt)

Any further advice appreciated xx

DJ_Mike

How much are you per month on your current fixed rate, and how many years left on your existing mortgage?

mad__money_2

We are currently on IO paying £333 per month, we will have 16 years remaining.

Sponge

They all seem like very good rates. I wish I was being offered them.

For comparison, Abbey have just offered me a 2 year fix @ 4.49%, with a £100 fee to stay with them. (Our deal ends this October too.)

mad__money_2

We are with The Chelsea xx

Sponge

Is the 2 year fix this deal?

DJ_Mike

If you stick with interest-only, assuming you meet your lender's LTV criteria, then borrowing 85k would cost you the following per month on each of these interest rates:

£264.92 @ 3.74%
£357.71 @ 5.05%
£391.71 @ 5.53%

Those last two are higher than what you're currently used to repaying, but this is because you're borrowing an extra 20k on top of your existing mortgage.

Do you have any kind of investment which is going to pay off the capital after 16 years?

Personally I would consider going for the 3.74% deal but see if you can fix your monthly payments at £333 - this way you're paying what you're already used to, but you'll also be paying off some of the capital.

I wouldn't bother with the variable rate deal as that is much more likely to go up over the next 2 years, rather than down, and you've been offered the same rate fixed!

Cannon_Fodder

Being on IO, what repayment vehicle do you have?

I'd go for the 5-year fix, so there was a saving that could give you leeway to go back to Repayment, if you have no repayment vehicle.

mad__money_2

That's great, thanks The reason we are on IO is because my husband was made redundant and had to take a very low paid job, this hopefully won't always be the case and we can then go back to repayment and increase the years again if we have to. We have shares that are doing well at the moment so all being well in a few years we can cash them in and take a chunk off the mortgage.