Will you fix if you are me?

horngkai

With all the news of BoE will probably start raising the Interest rate probably in the next 6 months or early 2011, I have been thinking whether or not to fix my mortgage.

I have a tracker at the moment, +0.89% Base rate. CUrrent LTV is probably about 80%. Looking at this, it meant that the best fix rate I could get might be in the region of 4-5% (2 year fix). That would means the Base rate will need to get up to 3-4% before it get to what might be able to fix to now. On top of that, any new mortgage will means I have to pay ~GBP1k for arrangement fees.

Will you, in this situation, fix your mortgage or just watch the market? Seeing that most expert are predicting that BoE rate will probably stay below 3% for the next 5 years or so?

getmore4less

With a tracker that low you will probably never need to remortgage again.

Overpay as if you were on 5% to reduced the mortgage debt.
This will most likely more than compensate for any rate rises in 2 year very likely for 5year and probably forever.

If you change now it is very unlikely you will see a follow on or tracker as low as this so whatever fix you chose you will almost certainly be paying more when the promotional period ends.

Cuurent best followon/tracker are around Base +2%

jockosjungle

I'd definitely stick on what you're on, you'll never get a better deal than that. Even if interest rates do wise I strongly doubt they can afford to let them get above what was a normal rate (about 4%) and any certainty you add to your mortgage with a 2 year fixed will just mean in a couple of years you're remortgaging again, paying another fee and probably a higher interest rate.

Any interest hikes will be offset by the fees and the generally low tracker rate.

As already said, get on a calculator and start overpaying at 5% interest rate equivalent (HSBC has a good overpayments calculator) to reduce the capital element and also prepare you for inevitable rate rises

R

R

horngkai

Thanks for the reply... by the sound of it, the best option is to keep my current mortgage then?

Any other opinions?

ray123

Stick for now and try to reduce the LTV to 75% by overpaying. This will open up some of the best deals on the market.

Thereafter, if you wish to fix, I would advise a fixed rate of 5 years. Co-op/Britannia are offering 4.99% on a 5 year fixed.

AdamBrunt

Where do you find these great deals for LTV's of 75% ? My current LTV is just above 50% but can find deals for 80%+ ??

jockosjungle

Above 60% you get the best deals available, dig around on money supermarket or something

R

Peelerfart

I agree with getmore4less.

You should pay your current mortgage as if it's 5% and watch the amount owed tumble.

hillcats

I agree, stick with what you have.
Like you, I also have a tracker mortgage (details below) I very much doubt I will EVER re-mortgage again. The BofE rates will rise, I believe they need to as we have to pay for this mess we are currently in, it will be the people on those high trackers or bad deals that will be re-mortgaging, many people would bite your arm off to get the same sort of deals we hold.

dwsjarcmcd

The price of fixed rates available now will reflect the predicted rate increases you are talking about anyway, so unless you desperately wanted the certainty of know what your payment is going to be (the answer to which is considerably more than your paying now) then I will agree with everyone else, stick where you are and overpay.

Gorgeous_George

Do not overpay.

Whilst I agree with those who say to stick with your tracker deal, you need to consider 'what if?'. What if rates rose to 5%? Could you afford to pay the mortgage? Probably yes.

So, why not overpay? It's all about the interest rate. Overpaying is effectively earning you 1.39%, equivalent to 1.7375% for a basic rate tax payer. Save your overpayments in a 5% Regular Saver and your overpayment money is working nearly three times harder for you (2.88 times more interest will be earned than would be saved by overpaying). When the Regular Saver matures (12/13 months) put the money in a cash-ISA and open a new Regular Saver.

If base rates then rise such that the Regular Saver or cash-ISA can no longer beat your mortgage rate, pay a lump sum off your mortgage and start overpaying (check t's and c's allow a lump sum overpayment).

GG