Is now the time for a fixed rate

dirk_

Hi Guys

I currently have a mortgage with the Abbey and am paying in twice the minimum amount per month so to reduce my mortgage term(by my own choice).

Bought the house 3 years ago with a 25year deal and because I have been increasing my monthly payment the loan period is now less than 10 years.

My question is, is now the time to get into a fixed rate deal, we are currently on Abbey's 4.2% variable mortgage but what with the way inflation is going etc. would it be wise to get locked in to a 2 or 5 year deal
:j

Peelerfart

Possibly,Probably,Maybe,Maybe not in truth no-one knows that really is a crystal ball question.

IMHO sit on a variable and watch and listen

dimbo61

At the same time have you considered a long term fix of say 5 years which is also offset ?
YBS have a 5 year deal at 4.79% with a £995 fee and you could put your overpayments into the offset account ( only my opinion not advice) GOOD LUCK

somethingcorporate

Post office fixed mortgages are pretty good too, check out:

http://www.postoffice.co.uk/portal/po/content2?catId=86700737&mediaId=102800763

5 year fixed 4.55%, £999 fee or 4.78% no fees.

10% P.A. Overpayment.

getmore4less

Why have you stayed with such a high variable rate?

Whats your cuurent LTV? if low enough you could get under 2.5%

dirk_

getmore4less wrote: »

Why have you stayed with such a high variable rate?

Ignorance, Stupidity, laziness any or all of those

getmore4less wrote: »

What's your current LTV? if low enough you could get under 2.5%

Our house is worth around £140K
Original Mortgage value was £80K
Outstanding Mortgage amount £73K

dirk_

Bump Bump;)

getmore4less

If you are able to double min payments on a repayment schedule you could look at the low cost trackers or even offsets to give a bit more flexability.

There is the risk that rates climb a bit quicker but that will put a lot of people in real trouble, you just reduce the overpayments.

Personaly I favour the lower cost tracker offsets over the fixes which tend to have higher followon rates.

margins over base are a bit higher than they have been and it is not clear if rates rise will they stay that way.

The long term trackers went down to < 0.5 over base but future deals like that will probably have collors.

play with some numbers in a calculator, overpayments have a massive impact on the debt and can give a good cushion against rises.

dirk_

Thanks for the info getmore4less

I spoke to HSBC yesterday and they have offered the following:

Tracker - Tracking @ 1.99% above the 0.5 current base rate (+£999 fee)
Fixed - 2 year fixed @ 2.99% (+£999 fee)

I am leaning more towards the tracker as even if/when the base rate goes up we have a buffer between the 2.49% (Tracker & Base) and the 4.3% that we are paying currently.

I will be given Abbey a call tomorrow to see if they can offer anything better
:beer:

property.advert

I went through all the maths in another post so search my user name. Within the last week.

Off the top of my head, unless you see rates at over about 7% average between 24 and 60 months, the best is the 2 year fix around 3% or the discount at around 2.5%.

As the fee is fixed for all sizes of mortgage, it has a greater effect on the smaller mortgages and can skew the decision in some cases. If you can use Excel you can plot the various scenarios against each other.

On a large mortgage, I might take the 2 year fixed because whatever happens in 2 years time, you are going to be able to average less than 7% over the following 3 years. However, on a smaller mortgage, I'd probably be looking more at the fee and how that skewed the numbers. You have to remember that 999/24=£41.63 a month which when you invert it into the mortgage rate of say 2.49%, is the same as another £20,000 on your mortgage.

£41.63/0.0249*12=£20,063

As for the OP, that has the effect of adding 22% to your 2 year costs. You need to do the whole maths.

getmore4less

Have a look at the First Direct deals they have lower fees.

http://www1.firstdirect.com/1/2/mortgages

LTV is <65%

offsets tracker
base + 1.99% £999 fee
base + 2.29% £0 fee

regular tracker

base + 1.89% £499 fee
base + 2.09% £0 fee

there are some fixes to look at as well.

for your mortgage of £77k 22ytern 4.2% thats around £450 pm paying double thats 900.

so for the regular trackers above paying £900pm
£77499 @ 2.39% 95months last payment £500
£77000 @ 2.59% 95months last payment £600
So little in it you are ahead till Jan 2015 with the no fee. ful term is till April 2018(while rates stay low).

To compare this against any fixed options like property.advert has done needs detals of a fix you might choose, PA maths with 7% in the following 3 years will not work with the 2 year fix equivilents but might against a 5y fix.