Variable or Fixed?

thedogsgottago

Hi we are moving house to a much more expensive one, we are burrowing an extra £90,000. Our mortgage is self cert the rates for burrowing more arnt great, its either 6.99 fixed for 5 years or 4.5 variable (4 above base) I read today that interest rates might go to 2% by the end of next year, there is an arrangement fee of 195 for the fixed deal and no arrangement fee for variable, what do you think is the best one to opt for?

dimbo61

The security of knowing what your mortgage is for the next five years even at 6.99% when you are borrowing an extra £90,000 on top of your current mortgage balance must be something you should consider carefully.
Self cert mortgages might be more difficult to get in the future?
Long term security for yourself and your family and if your business is doing well then overpay

Peelerfart

Yeah I'm not a fan of fixed and 6.99% sounds a lot from where I'm sitting
but that does mean you can sleep at night,and that's important too.

Have you explored other options with other lenders ?

Thrugelmir

theartfullodger wrote: »

Last time the Conservatives came to power interest rates hit 17% quite quickly, and stayed above/around the 10's for some years....

As the Merkins say, "Go figure"!

Cheers!


Lodger

Interest rates at that time have to be put in context. The same as the exceptionally low rates now, which have nothing to do with the housing market. Even though some people assume that it is. The BOE is now independent so times have changed.

Which ever option you choose now. I would also focus longer term than 5 years. Interest rates could be signficantly higher in the future for a period of time. So to reduce your interest bill you should look at ways of reducing the capital balance owed on your mortgage as quickly as possibly.

Gorgeous_George

The 4.5% SVR is not a tracker deal (or is it?). Just because it is BR +4% at the moment doesn't mean it will remain at that margin.

I'd expect interest rates to remain low for a few years (but a Tory government could change that). If you could afford to pay more than 6.99% should the worst happen, I'd go for the cheaper but variable rate.

But then I'd save the difference to provide a cushion if things turn nasty.

Remember, my opinion is free of charge and worth every penny.

GG

thedogsgottago

Its variable not tracker I dont think it says "which is Bank of England Base Rate plus
4.00% for the rest of the mortgage period" if it says rest of mortgage period does that mean they could still change the margin?

Thrugelmir

Almost certainly yes in exceptional circumstances.

Gorgeous_George

When the BofE base rate starts to rise I don't expect SVRs to rise at the same rate. Trackers will.

GG

dimbo61

6.99% is expensive for a 5 year fix on a normal repayment mortgage BUT the poster is looking at a self cert mortgage and we dont know the LTV on the new property so if you can get a better deal then start shopping or ask one of them nice "whole of market mortgage brokers" to have a look for you.
Are you taking out a 20/25 year mortgage ?
So why are you looking short term and what happens if the SVR is 9/10% in 2/3 years time ! Your choice and GOOD LUCK