Mortgage recommendations please

Mummy_to_Lily

Hi All

I'm just after abit of advice please.....

My current 5 year fixed deal ends in December 2010. The rate is 4.69%.

The issue is, I am due to have a baby and will be off on maternity leave at the end of the year when the fixed rate runs out so would like some certainty, particularly as our income will be significantly reduced by then.

I can end the 4.69% deal early and it will cost approx. £2.5k to redeem.

I am happy to end the deal early in exchange for some certainty now, but not exceeding the rate we are currently on.

House Value - £350,000
Mortgage Required - £256,000

Is there such a thing as a 'capped tracker', ideally with the cap not exceeding 4.69% for say at least 5 years, so we can at least try and claw back some of the redemption fee by getting the benefit of the tracker rate for a while (I appreciate the length of the tracker is a gamble).

Hope I've made sense?

Thanks for any advice.

beecher2

Seems to me like a bad move to pay £2.5k to get out of it, particularly as a tracker is less 'certain' and the deal you're on is relatively low. Which lender are you with? If you get a new deal with them at the end of the year, you wouldn't be asked about income etc.

Mummy_to_Lily

My lender is Nationwide.

It's not the fact that I'm worried about declaring my drop in income to Nationwide (or another lender), I'm concerned that the renewal interest rate in December 2010 will be higher than what we currently have now, particularly considering my earnings would have dropped.

If you like, I'm happy to pay a fee now to 'buy' the certainty over and beyond my maternity leave to ensure our mortgage payment don't go up at a time when we have less money coming in.

beecher2

Bit of a waste of £2.5k in my eyes - I can't see how the renewal would cost you that much more, but then you do have a very large mortgage so maybe the figures will stack up.

Found this

Borrowers who are concerned about potential interest rate rises could opt for a capped tracker deal, which limits how far the pay rate can climb. Yorkshire Building Society is offering a two-year tracker at 2.49 points above base, a pay rate of 2.99 per cent, which is capped at 4.99 per cent. It has a £495 fee, available up to 75 per cent of a property’s value.

http://www.timesonline.co.uk/tol/money/property_and_mortgages/article6989674.ece

A mortgage advisor would be able to tell you about any other deals - I'd think 5 year deals might be rarer, and have a higher cap but could be wrong.

dimbo61

Do Nationwide do a 2 year fix at 4.29% and can you apply 3/6 months before your existing deal finishes
Give them a call ( dont tell them your pregnant) and ask !
Think the 5 year fix is 5.99%

dimbo61

Leeds BS have a 5 year fix at 4.75% LTV 75% max and £999 fee
Long term security

dimbo61

Hi M to L
Just been on Nationwide website
They are doing 2 year fix at 3.79% Fee £495 and
3 year fix at 4.49% fee £495 for existing customers

HarrowArrow

My Nationwide fix is at 4.69% and ends December too ! I am assuming (eek) that interest rate rises are unlikely this year and will revert to BMR which is currently only 2.5%. My mortgage is only £50k though so fluctuations would hurt less than OP's..

Thrugelmir

beecher2 wrote: »

Seems to me like a bad move to pay £2.5k to get out of it, particularly as a tracker is less 'certain' and the deal you're on is relatively low. Which lender are you with? If you get a new deal with them at the end of the year, you wouldn't be asked about income etc.

If the OP has £2.5k free. Then it would more sense to overpay the mortgage now. Rather use this to transfer elsewhere.

HarrowArrow

Thrugelmir wrote: »

If the OP has £2.5k free. Then it would more sense to overpay the mortgage now. Rather use this to transfer elsewhere.

Yes, and Nationwide allows up to £500 a month overpayment for fixed-rate deals (so they can do it in 5 consecutive months), I should know as I was doing it for a while, until extra money ran out when we bought a new kitchen....