Remortgage vs start on standard variable rate

shomk

We have been on a fixed mortage for almost 2 years now (5.something) with cheltenham & gloucester and nearly cried when all our friends on variable rate mortgages had significant drops in their monthy payments due to the economy problems.

We are due to remortage in June (a while off yet but thinking ahead) and are wondering if we dont remortage but go onto the standard variable rate if this will reduce our payments?

Has anyone else done this and found it to be of benefit?

Also, we have had one very bad experience with a mortgage adviser and a second not great one, should we learn more and do it ourselves or try an indepedent financial adviser (I have found a good one!)? Thanks!

beecher2

The SVR is 2.5% so your payments would reduce, unless interest rates have moved upwards by then. (doubtful, but who knows)

Use this to calculate what your payments would be

http://www.moneymadeclear.fsa.gov.uk/tools.aspx?Tool=mortgage_calculator

What is the outstanding amount of your mortgage, and how much is your house worth? Your Loan to Value ratio will have a big impact on whether you're able to remortgage, and what rates you'd get. Your credit file will also be important if you look elsewhere.

If you do go on the SVR, make sure you overpay/save the difference, so as you are prepared for when the payments go back up again.

shomk

Thanks! Our mortgage is about 170 and house hopefully worth about 200. Unfortunately our biggest problem is that my husband has started self employed (will be about a year) so Im guessing remortgaging will be the impossible, which I am very worried about! Credit file needs improving.

But you are right about overpaying - this would be something we would want to do.

I know no one knows, but when does anyone think the SVR will go up?

beecher2

You'd be able to get a new deal with C&G as they wouldn't look at your credit file, or ask for income information.

Keep an eye on this

http://www.cheltglos.co.uk/mortgages/existing-customers/switching-to-a-new-deal/index.html

and see what the deals are like - you could probably phone them up next month, just to see what they'd offer you so as you know what they think your house is worth.

shomk

Oh really! You've been a lot of help thanks!

dimbo61

You dont give your exact interest rate you are paying on your fixed rate deal
So I am guessing say you are on 5.49% right now with a £170,000 mortgage you would be paying about £777.75 a month.
Now if you go onto the SVR at 2.5% your mortgage would drop by over £400 a month ( new rate £354 APPROX).
If this happens then either save the extra into ISA,s over overpay the mortgage to increase the equity ( You have only got 15%)
This depends how the new buisness your husband has started! GOOD LUCK