C&G fee free fixed deal at end of current deal - advice

mpazza

Hi I've been looking forward to my fix ending in February - £160,000 so I can go onto the SVMR which is low at 2.5% presumably to keep the goverment happy after LTSB bail out.
I'm paying 5.29% at the moment but got a letter today offering me 4.5% fixed for two years when this deal ends.
I know its crystal ball territory but anyone have any inkling if C&G will push the SVMR up in the near future I suppose if C&G get sold off that is likley or if they can pay the Goverment back etc.
My circumstances have changed since the last deal - newly self employed with less income and probably no chance of getting a good deal elsewhere.
If the interest rate stays at 2.5% I'm nearly £300 a month better off with the SVMR though hence the dilema.
What would fellow MoneySavers do?

Matt1982

Tough one....probably all depends on your attitude to risk. Are you comfortable to take the chance of sticking on the SVR and risk it going up over time.

My personal opinion is that interest rates will rise the question is when.

Personally I would go for the fixed rate at 4.5% to secure my payments for 2yrs but thats just me. Out of interest what are the early redemption pens on the new 4.5% fixed deal?

Without saying for definite the chances of getting a new mortgage if newly self employed are slim.

mpazza

Matt1982 wrote: »

Tough one....probably all depends on your attitude to risk. Are you comfortable to take the chance of sticking on the SVR and risk it going up over time.

My personal opinion is that interest rates will rise the question is when.

Personally I would go for the fixed rate at 4.5% to secure my payments for 2yrs but thats just me. Out of interest what are the early redemption pens on the new 4.5% fixed deal?

Without saying for definite the chances of getting a new mortgage if newly self employed are slim.

Forgot to make a note of the redemption, in the past with C&G it has been 2% year one on a 2 year 5% year one on a 5 year etc but I guess things are all different now.
I've always fixed for the past 10 years and always got the rate/timing wrong! But I fixed because I was paying close to what was affordable so the risk was to great hence no option really. the deal has to be taken before the fixed rate ends so I have another month or so to consider.

I havent done any research yet but I'm guessing regardless of credit score etc 4.5% with no fees is pretty good?

Matt1982

It does sound like a pretty decent deal for you.

Guess the question to ask yourself if the SVR went up and up and up could you afford that?

How newly is newly self employed?

mpazza

18 months but 1st year had only £5000 profit though my wife is working as a teacher now so her income could be included.
I guess I could afford the interest to go up from 2.5 to 6 or so but the worry is if C&G get sold off the rate could jump up as it is probably one of the best standard variable rates at the moment

Rocksteadycrew22

I have exactly the same issue and would appreciate some advise my mortgage around £250k currently fixed rate, offered same deal as referred to above standard variable, 2.5% saving £460.00 per month against fixed rate 4.5% for 2 years saving me £215.00 a month, just so unsure how likely it is that rates will remain low, having been stuck on such a high rate and having had no benefit from the recent reductions all seems unfair? What to do?

mpazza

Rocksteadycrew22 wrote: »

I have exactly the same issue and would appreciate some advise my mortgage around £250k currently fixed rate, offered same deal as referred to above standard variable, 2.5% saving £460.00 per month against fixed rate 4.5% for 2 years saving me £215.00 a month, just so unsure how likely it is that rates will remain low, having been stuck on such a high rate and having had no benefit from the recent reductions all seems unfair? What to do?

I think Matts advice confirmed to me I'm unlikley to get a decent rate elsewhere you may have better circumstances than me and may have the option of shopping around and if you find you could get something similar you may be able to enjoy 2.5% for a while!

Matt1982

Whats your wifes salary? whats your hosue value?

Thrugelmir

Two years is a short term fix. Base rate would have to rise rapidly for the current SVR of 2.5% to have any benefit over a 4.5% fix in 24 months.

Personally I would drop onto the SVR and maintain your repayments at the current level. By doing this you are speeding up the repayment of capital. By reducing the capital balance you will reduce the amount of interest you pay over the longer term.

As for Lloyds. There's no certainty as to how they are going to comply with the EU's ruling. So I wouldn't worry about it currently. Focus on paying off your mortgage.

mpazza

Matt1982 wrote: »

Whats your wifes salary? whats your hosue value?

house £240000
Wife £21000

pity its not the otherway around!

mpazza

Thrugelmir wrote: »

Two years is a short term fix. Base rate would have to rise rapidly for the current SVR of 2.5% to have any benefit over a 4.5% fix in 24 months.

.

Thats true but the worry is C&G has the lowest SVR and if LLoyds sell them off or pay the goverment back that could suddenly rise irespective of base rate?