No hidden surprises?

ajtrader100

Hi there,

I currently have a fixed rate mortgage with Alliance and Leicester that ends in April this year. The rate will then go to 0.75% above the base rate.

I rang to ensure that this meant it goes to 1.25% at the current rates, and they said yes.

Thats great, but I just wanted to check that I'm

a) not going to get hit with some random charge when the fixed rate ends

b) check to see what peoples thoughts are again about the potential of Interest rates going up, and when. I posted this particular question in August last year, and I wanted to get other peoples opions.

Thanks

Andy

_Andy_

A) No no charges
b) you will get a mixture of replies!

ajtrader100

Also my mortage started at around £107K, should be down to around £90K, we pay £635 per month - how do I calculate the new monthly mortage cost based on the interest rate dropping to the 1.25%?

devon123

Andy, do you mind me asking which deal you are on and then you took it out?

I am on 2 year fixed (@5.79%) ending end of April and I go on to the SVR @ 4.99%. Just wondered whether I had got this wrong - I will ring them in the morning to ask, just to be sure! It would be a nice surprise if so, but I doubt it .....

devon123

p.s. who knows about interest rates. I think I am going to go for a tracker (2.49) with to tie-in / penalities for leaving and overpay as much as poss for 18months, then look to switch if needs be. However, I do keep changing my mind!http://www.bankofengland.co.uk/monetarypolicy/decisions/decisions10.htm

It shows who has voted for what re interest rates
I look at this site occasionally though re interest rates...

ajtrader100

Devon,

I am with Alliance and Leicester and am fixed at 4.89%, I double, then triple checked the paperwork, then rung them it states I will go to a rate that is 0.75% above the base rate. Which would make it 1.25% (for the time being!!)

Some fixed rates do then go to a variable rate, but this one goes to a rate that is 0.75% above.

Hope this helps.

devon123

When did you take it out? Probably a while before I did I think.

Sounds great though - I would stick with that and be jumping up and down if I had that rate! :money:

Might check my paperwork though...

ajtrader100

It was a five year deal, so not been too great recently..... the joys of fixed rates I suppose.

It definitely goes down to that rate, I know I was a little shocked when I read through everything, but it is superb, can't wait to start paying huge chunks off every month. We are currently over-paying by £100 a month at least. Would be nice to know how to work out the mrtgage checker for an existing mortgage.

It will be down to approximately £90,000 on a 20 year deal, as I started on £107,000 at 25 years.

devon123

90k @ 1.25% over 20 years = monthly payments of 424.02 (repayment+interest) according to the mortage spreadsheet I go from this site.

Happy days!

ajtrader100

devon123 wrote: »

90k @ 1.25% over 20 years = monthly payments of 424.02 (repayment+interest) according to the mortage spreadsheet I go from this site.

Happy days!

Superb, a drop of over £200 per month. That will go straight on overpaying!!!!!!!! CHEERS!!!

Oh, and thanks for the monetary policy spreadsheet, that will come in handy when the mortgage ends in 2 months. Will keep checking for any news.

becominganobsessivesaver

Have a think before rushing into overpaying. You could easily get 2.5 to 3% in an ISA or other savings account which you could use to overpay a lump sum if rates go up. Also you may find that your current mortgage is portable and should you decide to move you will have less of a mortgage at this low rate! You must be so pleased- I was when we had a similar situation with woolwich