📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

SVR or FIX Bristol and West 100% professional mortgage.

Options
Firstly, apologies. There are probably thousands of posts like this.

However, just want a heads up. I am a teacher and spending the majority of the summer sorting out my financial plans. I currently have a flat in London with my partner. Facts about the case:

Bought flat : Feb 2007
Purchase Price: £172,500
Current Price - estimate based on other similar properties : £155,000 - £160,000
Mortgage : 100% Interest Only on 6.19% fixed for 2 years.
Deal Runs out: Feb 2010
Mortgage company: Bristol and West
Savings: None - currently paying off loan.

So the problem is, Bristol and West are obviously buckling down with regards to their UK mortgage market. However, following phone call yesterday they ARE offering exising customers new deals. They said the current new deals they are offering are 5.49% fixed for 3 yrs, 5.99% fixed for 5 years. Their current SVR is 2.99%.

My predicament is....come Feb (sorry for being panicy in advance) their fixed rates will probably have gone up. Should we stick with SVR or stick again. I know no one has a crystal ball about the BoE base rate but according to the minutes of their August meeting they expect it to rise to around 4% by 2012 Q3. This would mean our SVR would rise to 6.9% by then (according to paperwork at minute)

What does everyone this about this? We can't remortgage as in -ve equity. However house prices in our area have gone up around 2% in past few months. Not great but still its working towards breaking evem.

Any advice please post....

Comments

  • opinions4u
    opinions4u Posts: 19,411 Forumite
    edited 14 August 2009 at 1:15PM
    walshj77 wrote: »
    However, just want a heads up. I am a teacher and spending the majority of the summer sorting out my financial plans. I currently have a flat in London with my partner. Facts about the case:

    Bought flat : Feb 2007
    Purchase Price: £172,500
    Current Price - estimate based on other similar properties : £155,000 - £160,000
    Mortgage : 100% Interest Only on 6.19% fixed for 2 years.
    Deal Runs out: Feb 2010
    Mortgage company: Bristol and West
    Savings: None - currently paying off loan.
    Thank you for posting this detail. It makes your questions so much easier to help with.
    So the problem is, Bristol and West are obviously buckling down with regards to their UK mortgage market. However, following phone call yesterday they ARE offering exising customers new deals. They said the current new deals they are offering are 5.49% fixed for 3 yrs, 5.99% fixed for 5 years. Their current SVR is 2.99%.
    Does the SVR track BofE base rate, or can they charge whatever they feel appropriate?
    My predicament is....come Feb (sorry for being panicy in advance)
    It's not panicy. It's planning ahead. Good for you.
    their fixed rates will probably have gone up.
    Why?

    The may do. They may not. I can't see any forward indicators that would significantly shift fixed rate costs.

    Here's a link to help track UK swap rates though. It will give you an indicator of bank funding costs for fixed rate lending and if things start edging up you may consider a different strategy.

    It also compares swap rates to 12 months ago (they were lower when BofE rate was 5% ish higher).
    Should we stick with SVR or stick again.
    If the SVR is a BofE tracking rate, I'd go SVR. If not, go on the SVR but keep an eye on things. Don't trust them to follow BofE up or down.

    If your SVR was currently 4%+ I'd be suggesting you fix for 5 years!
    I know no one has a crystal ball
    I apply my usual crystal ball disclaimer to the previous suggestion.
    What does everyone this about this? We can't remortgage as in -ve equity. However house prices in our area have gone up around 2% in past few months. Not great but still its working towards breaking even.
    I'll predict your house price now will be no more than 10% higher in 3 years, and probably within a 5% range either way. But it's a crystal ball wild guess (based on the 1990s negative equity era).
  • walshj77
    walshj77 Posts: 40 Forumite
    This is a brilliant post. Thanks so much.

    I like to be prepared for what may happen in February you see.

    We WILL be able to afford the mortgage either way but would like to take advantage of low BoE base rate in order to make some overpayments on mortgage and hopefully bring down the LTV that we will require to eventually remortgage.

    According to our paperwork and original mortgage contract:

    the contract states:

    'unless we give you notice to the contrary, our SVR rate will not exceed BoE base rate plus 2.5% during any period when you are being charged interest on the loan '

    however it later states they can give us notice of this. The notice will be 90 days.
  • walshj77
    walshj77 Posts: 40 Forumite
    Anymore help or advice?
  • Phirefly
    Phirefly Posts: 1,605 Forumite
    Thanks for extremely helpful post, opinions4u.

    Hi Walshj, we are in a very similar position with B&W only our fixed rate is up in April 2010.

    When you spoke to B&W, did they say they would offer those fixed-rate products in spite of negative equity?

    Also, are they offering the option to book the product in advance?

    Thanks in advance.
  • walshj77
    walshj77 Posts: 40 Forumite
    Phirefly wrote: »
    Thanks for extremely helpful post, opinions4u.

    Hi Walshj, we are in a very similar position with B&W only our fixed rate is up in April 2010.

    When you spoke to B&W, did they say they would offer those fixed-rate products in spite of negative equity?

    Also, are they offering the option to book the product in advance?

    Thanks in advance.

    Yes they are prepared to offer in negative equity. At least I told them we were in -ve equity and they then proceeded to say what they would offer us.

    Secondly, no they wont offer the option to book the product in advance.

    What I want to know if could we go on SVR for a little bit then get a deal or do we have to accept the deal at the end of our current deal?

    They were really useful when we rang and very helpful so maybe it could be an idea doing that?
  • Phirefly
    Phirefly Posts: 1,605 Forumite
    walshj77 wrote: »
    What I want to know if could we go on SVR for a little bit then get a deal or do we have to accept the deal at the end of our current deal?

    Yes thats what I'm interested to know too. I imagine its just a gamble, you would just stay on the SVR and keep your ear to the ground until you hear rumblings that there might be a rate increase or the fixed rate products are going to be withdrawn from that lender. It would be nice if they gave you some forewarning but I suspect it doesn't work like that!

    Its reassured me to know that B&W are offering remortgage deals to existing customers in NE though, so thanks for your thread.
  • Teterow
    Teterow Posts: 242 Forumite
    What I want to know if could we go on SVR for a little bit then get a deal or do we have to accept the deal at the end of our current deal?

    yes, you can switch to svr before taking up another fixed rate deal
    Challenges:
    3 NSD per week
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.2K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.7K Spending & Discounts
  • 244.2K Work, Benefits & Business
  • 599.3K Mortgages, Homes & Bills
  • 177K Life & Family
  • 257.6K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.