Fixed rate or not?

MichL

Hi, we are moving home and have an option to port our existing mortgage with Nationwide. It was a fixed rate mortgage at 4.88% taken out in 2006; we have 6 years left on this product. Alternatively we could pay the ERC [£2200 ish] and take out a variable rate mortgage, currently at 2.5% ish. I know in the short term we would be best off to pay the ERC and take the new product but I really like the idea of knowing our mortgage payments in the long term [6 years!] and not having to worry too much about interest rates rising, which they inevitably will do at some point. We have 1 week to decide and are in a bit of a quandry. Please help!

Peelerfart

4.88% is not a bad rate and it's gives you the security you wanted - stay with what you have.

PF

Thrugelmir

What's the size of your mortgage?

MichL

This part of the mortgage is £72,000 ish. We have a second part [£95,000] at a much lower fixed rate for 3 years with the same company and we're more than happy with that.

Thrugelmir

To break even, if the status quo was maintained, would take you around 18 months. Any rise in interest rates in that period would extend the period further.

So a better option may to reduce your fixed term mortgage by what you would have spent on ERC's. Then you can sit back and watch future developments unfold.