Should I switch to variable rate?

bubblepop_2

I've been on the HSBC homestart mortage for the past 2 years(took it out at peak of market - grrr!) on fixed rate (interest only), the next stage is to go onto another year of interest only before moving onto repayment next year. I've been offered to go onto variable which means payments being £160 cheaper every month!
Obviously I'm thrilled about this as I've struggled on my current payments a bit, so I can hopefully get myself back on track and then once I do that, start saving, hopefully up to £100 a month (and hopefully moving in with partner in that time to help spilt bills!)
Is this the best thing to do? Am I right to think rates won't go back up to what they were in 2007 in the next year?

nickmack

bubblepop wrote: »

Am I right to think rates won't go back up to what they were in 2007 in the next year?

No, although the general concensus is that rates will remain low for a little longer, they could easily go back up as rapidly as they came down.

Based on the fact you bought at the top and you're interest only, I'd guess your in negative equity. This may leave you in a difficult position if you can't afford the payments and need to sell the house to get out.

Just something to think about.

bubblepop_2

I'm not in negative equity as I had a good deposit (gift from family) - I also bought off plan so paying off 92000 on a property I estimate is now worth 110000
I suppose my theory is that even 3 months on the lower payment would get me out of my overdraft and in a better position - and the worst that can happen is rates go back up to what they're were i.e so I'd pay what I have been paying which is a struggle but do-able?!?!
Maybe I should go in a see an advisor to talk through options anyway though...

happybroker

bubblepop wrote: »

I'm not in negative equity as I had a good deposit (gift from family) - I also bought off plan so paying off 92000 on a property I estimate is now worth 110000
I suppose my theory is that even 3 months on the lower payment would get me out of my overdraft and in a better position - and the worst that can happen is rates go back up to what they're were i.e so I'd pay what I have been paying which is a struggle but do-able?!?!
Maybe I should go in a see an advisor to talk through options anyway though...

that sounds like the best thing to do but make sure they are an advisor with the qualifactions to help you as opposed to an unqualified "seller".

Charlton_King

Does anyone seriously view a meteoric rise in mortgage rates as likely while the economy is still a bed case..?