Fixed Rate Ending in May

Beancounter

My 5 year fixed rate with the Alliance & Leicester ends at the end of May. Our balance will only be around £30K from an original £37K mortgage.

Our rate will move to a tracker at the end, 0.75% above base rate. Currently that would mean our rate would be 1.25%, a full 4% less than currently.

Looking at the various fixed rate deals it appears most of them have a huge fee to pay. I was thinking that with the size of our mortgage we would be better sticking to the tracker for the meantime, would that be a correct move?

Joe_Bloggs

@Beancounter
I suspect that doing nothing would be more advantageous than doing something else.
I am surprised that your mortgage balance only changed from £37K to £30K in five years. How many years are left on the mortgage ?
J_B.

opinions4u

I was thinking that with the size of our mortgage we would be better sticking to the tracker for the meantime, would that be a correct move?

Yup. Stick with the tracker!

If your payments are dropping, why not save the amount of the reduction in to a monthly saver type account (e.g. Barclays 4.25%) and review the difference between net savings rates and mortgage rate every year or so.

You could build up a tidy sum with which to repay the capital in full a lot sooner than originally thought.

dimbo61

You should move onto the tracker and either save into regular savers ( like Barclays) or cash ISA,s.
When rates do start to rise you could then pay a lump sum off the mortgage

blobby1982

We are in a imilar position but our mortgage and LTV is much much higher - 127K against 155K property. This means most reasonable fixed rate options are out of reach anyway.

It has been suggested that we go onto the SVR and then use the difference to overpay on the mortgage (watch out for those ERCs though). That way you will clear the balance much sooner and save a small fortune. There are some online calculaters out there which can calculate how much of a saving you can make by overpaying.

Watch those SVRs though - they can change and you need to be able to afford repayments if things start to shoot up.

Beancounter

Joe_Bloggs wrote: »

@Beancounter
I suspect that doing nothing would be more advantageous than doing something else.
I am surprised that your mortgage balance only changed from £37K to £30K in five years. How many years are left on the mortgage ?
J_B.

There are 13 years and 5 months left on the mortgage.

I think the tracker is the best thing to go onto. We are fortunate enough to have a few hundred pounds spare each month so may go down the savings or ISA route to build up a pot to help pay off some capital wjhen rates are going up again.

Thanks all.