End of A&L fixed rate mortgage-base rate tracker

perplexed.com

Our A&L 5 yr fixed rate mortgage is due to end in May. It looks like it will then move onto a base rate tracker ( BofE + 0.75%). Would it be wise to overpay the difference for a few months then book a new 5 yr fixed rate ( as we like the security of this )? Or will these deals get more expensive by then, wiping out any advantage?

We have about 55% LTV and 11yrs 7mths but would like to reduce the term to 10yrs and try to shorten this with overpayments throughout, hopefully reducing the term further.

Ta!

wodgerdodger

If I were in your shoes I owuld stick with the tracker you now have. 1.25% with no tie ins is a great product and base rate would have to rise siginificantly before you lose out.
I would suggest you continue to pay the amount you were paying whilst on the fixed rate this will realy reduce the outstandiung term quite quickly.
If you speak to mortgage admin at A&L they should be able to tell you how much your term will reduce by if you continue to pay the same amount as before.

opinions4u

perplexed.com wrote: »

Our A&L 5 yr fixed rate mortgage is due to end in May. It looks like it will then move onto a base rate tracker ( BofE + 0.75%).

That is a fantastic rate.

Would it be wise to overpay the difference for a few months then book a new 5 yr fixed rate ( as we like the security of this )? Or will these deals get more expensive by then, wiping out any advantage?

You will typically pay around 4%-5% more for a 5 year fix. Most forecasters don't think BofE rate will rise by this much in the next 3 years (it doesn't mean they're right, but it is a guide you could choose to use).

We have about 55% LTV and 11yrs 7mths but would like to reduce the term to 10yrs and try to shorten this with overpayments throughout, hopefully reducing the term further.

Don't overpay to the mortgage. Overpay to a savings account paying over 1.25% net. Such as a cash ISA (www.if.com pay 2.5%) or The AA savings account paying 2.4% net. Or the Barclays Monthly Saver at 3.4% net.

If the savings rates drop below the mortgage rate, then move the capital and interest from the savings accounts to the mortgage account at that point. The interest earned will be more than the interest saved on the mortgage.

perplexed.com

Thanks for the suggestions. Obviously it does hinge on what rates do in the future which I know is a gamble but it does look like they won't be shooting up in the near future. When we took out the mortgage we hadn't realised this would be such a good rate to go onto, and tbh I think base rates were higher then, anyway.

Opinions4u; I hadn't thought of using an ISA but that's a great idea, thanks!