Interest Rate & Mortgage

Fuzzythinking

Hi

I am struggling which mortgage would be best for my needs. Should I go for standard variable rate, fixed, discounted rate mortgae or tracker rate mortgage. I only need to borrow in the region of 60k to 90k.

Another question is will interest rate go up or down within next 2 years?

I would be grateful to hear from your feedback

Kind regards

Fuzzythinking

MortgageMamma

Hello Fuzzythinking

It is near imposible to predict what will happen to interest rates but they are at the lowest they have been for a long time at the moment. If you do not want ot take the chance of interest rates rising a fixed rate mortgage would be better for you. A capped rate mortgage is also a good option, as you would have the advantage of being able to take advantage of rate decreases whilst knowing your mortgage will not go above a set amount during x number of years.

Have you thought how long you would like to commit to any particular mortgage contract? With fixed and capped mortgages there are usually penalties if you change lender or pay of the mortgage within so many years. Some trackers and discount mortgages also do this but there are contracts available without penalties.

Fuzzythinking

What is the difference between early overpayment and redemption penalties?

Fuzzythinking

MortgageMamma

Early repayment charges and redemption penalties are the same thing

An early repayment charge can occur when you overpay a lump sum or regular overpayments exceeds the contract limits. Or when you pay off the mortgage early/move to another lender during the early repayment charge period.

Early repayment overhang is where the early repayment charge is extended past the end of the fixed dicounted or tracker period. i.e. if you had a 3 year fixed/discount/tracker and the lender expects you to remain with them for say 5 years or face a penalty.

Most contracts these days have these, particularly with fixed rates, but there are trackers and variable mortgages that do not have these charges,

HTH

MM

Robert_Sterling

Discounted rates can be good.
I would avoid Standard Variable Rates if possible.

TangentMan

Fuzzythinking wrote:

Another question is will interest rate go up or down within next 2 years?

Both, several times i would have thought.