Good mortgage offer or not?

Roatfale

Ok, home now and have letter in front of me.

Amongst the opening blurb is the following text: Your current mortgage is a whole term tracker (BOE base rate plus 0.20% for the life of the loan)

Heres the break down of the offer:

2.99% fixed until 1 March 2015, then changing to Newbury's SVR, currently 4.45%, until the end of the mortgage term. The overall cost for comparison is 4.1% APR
No fees to transfer into this product
Unlimited overpayments at any time
No early repayment charges if you repay your mortgage in full

Limited offer, must contact within 2 weeks etc etc

Minimum transfer is £50 (we have £69k left on it currently).

So, what do you reckon? Stay as we are I'm thinking.

Thanks again

getmore4less

At least they gave you your current offer to compare against

Stick with the tracker but to be sure overpay* as if it was a 2.99% deal.

This fixed rate only protects you for 5 years then leaves you in a much worse situation for the rest of the lfe of the loan since the SVR is likely to be a lot more than 0.2% over base.


* since the rate is so low you will be better saving this money rather than overpaying.

Gorgeous_George

It is a tempting offer. Maybe it gives us an insight into where lenders believe base rates are heading (or are not heading).

If you owed £100K and with 20 years remaining you would pay £554 at 2.99% but only £446 at 0.7%. So, in the short term you could save £92 per month by sticking with the tracker.

How long will low rates last? Well, I think they are here for the next 5 years at least - certainly below 3% for 3 years is my guess.

Therefore, on balance of probability, I would stick with the tracker. Perhaps I'd phone and ask them to make it ten years and they have a deal. You could compromise on 7 years. They may not be flexible.

Of course, if they don't get enough people to switch, they may do a Skipton and vary the terms of the mortgage due to exceptional circumstances (or some other small print clause).

But it is a good offer.

GG

Dan_1976

A lot of predictions say BOE will be at about 2% between 2011-2012. WHo knows what SVR's will do. If Skipton get away with the rate raise then the floodgates will open!

I would go fixed at 2.99% with no fees or ties. It was not that long ago people were poopooing the doubters of the housing market so be careful and go with your gut feeling or what you think is right for you.

GG grow up, I declared myself, its a big difference!

getmore4less

With a letter in March 2010 saying

Amongst the opening blurb is the following text: Your current mortgage is a whole term tracker (BOE base rate plus 0.20% for the life of the loan)

I think the lender would be on difficult ground trying to change this.