Fixed Rate or SVR?

Trumsiz

Hello everyone,

We took out a 3 yr fixed rate which is due to end in April and we're unsure whether to carry on with SVR or try and find another fixed.

At the moment our fixed term was 5.69% on 156, 750 for 37 months. If we go onto SVR with the Bank of Ireland I think the SVR is 2.99%. this would reduce our monthly payments by over £200. We could then overpay.

However, I'm concerned if might get harder and harder to get a fixed rate mortgage. I think we now owe 150,000 on a house worth $150, 000. So we would need to find another deposit to get a fixed rate wouldn't we? as the LTV is too high?

any advice opinions, would be great!
thanks
Sue

blueberrypie

Yes, you'd need a deposit to remortgage. The best bet now is to overpay as much as you can in order to reduce your LTV.

Trumsiz

also, I think I've been a bit naive...
when we took out our mortgage it said after 37 months at fixed rate we would then go onto the SVR which was currently 7.4%.

So now, the fixed rate is ending, am I tied in to pay at the 7.4% rate or does this mean whatever their current rate is now?

FlowerPower

It should be the current SVR not what it was when you signed up. I'm on Bank of Ireland's SVR too at 2.99%

Trumsiz

I hope so Flowerpower as I would get a few months to sort finances out and I'd also get to tell my brother he is wrong!!! ha!

MB1919

I'd certainly stay on the SVR of 2.99% and get your LTV down as far as possible. With the money you'd be saving, you could consider overpaying on your mortgage or perhaps saving regularly into an ISA. To be honest, you don't have much choice anyway given that you have little or no equity in your property. Good luck.

chedges

Mortgage conditions are pretty tough at the moment but it wont last. Now its going to be almost impossible to remortgage as you have no equity in your house. Or if you did manage to get Bank of Ireland to do a deal (nationwide for eg have been remortgaging for for their current borrowers even if they have negative equity) then it would be very expensive.
Interest Rates are going to start increasing at some point this year, and as they do fixed rates will increase too. So you need to work out the optimum time to go onto a fixed.
For now though, it would be too expensive for you, i'd stay on your SVR and try and save the money from doing this and put into an ISA.
Also it may be worth speaking to a mortgage advisor, they are free.

Phirefly

I am in almost an identical situation to you, OP. I ran a search on this board a while back for those coming off a Bank of Irelend (or B&W) fix and found that it seemed people were being offered a new fix deal from B of I regardless of their LTV, but as a previous poster mentioned, the rate was higher than their existing fix, 6.99 or something, but only for 2 years I think.

We plan to drop onto the 2.99 svr and continue with the monthly amount we were paying before (effectively overpaying as you have mentioned) and sit tight and hope we're right in our hunch that we won't lose out massively over the next 2 years compared to had we fixed at 6.99.

It would be interesting to hear what you decide, good luck.

Harry_Powell

You usually don't need a valuation if you're staying with your existing mortgage lender. Get in touch with them to see what deals they are able to offer to you as an existing customer. If you don't like what they're offering then go onto the SVR and overpay like mad to improve your LVT (loan to value).

Remember though that most deals these days require a minimum of 5% mortgage, which would mean that you'd have to overpay £7500 pm. If you only overpay by your £200pm SVR saving, you'll not hit the 5% deposit for another 37.5 months (3 years).