How long should I stay on the SVR?

Cortinaa_GTR

Hey,

How long should I stay on the SVR?

I bought my property for £80,500 in June 2007 with a mortgage of £76,699. I was interest only for the first two years but have been on the SVR at 2.99% since June 2009. This has allowed me to OP £7,700 so my current mortgage balance is £68,998, with my monthly interest payment now down to £171 but reducing after each OP.

I obviously bought at the top of the market and I'm probably still in negative equity (although haven't had a valuation) so I've just been OP as much as possible to reduce the balance and interest whilst improving the LTV ratio for my next mortgage product. Should I wait until interest rates start to rise and keep OP until then or find out now what my LTV ratio is now and switch to a repayment mortgage?

I'd hope the rate will stay at 0.5% for a while yet ( 6 months - 1 year?) but keep hearing inflation is endangering it. Surely if the cost of living is rising they can't put interest rates up too so everyones mortgage goes up or is that a too simplistic view?

All opinions welcome as normal?:cool:

slummymummyof3

The difficulty is that once rates start to rise, decent fixed rates are likely to be pulled. Unfortunately, that means either suck it and see with the SVR or bite the bullet and get a 5 year decent fixed rate now where you will be paying more in monthly payments than you are right now, but you will have longer term security. HSBC were offering 3.94% for 5 years for a £99 arrangement fee - don't know whether this is still available or if you have sufficient LTV though????

getmore4less

without equity you are stuck with the cuurent lender.

Have a look at their deals and if any look ok post them
If there are no good ones then you can stop thinking till you do have some equity.

dimbo61

Most good fixes like the HSBC deal of 3.95% are for LTV of 75% or less so you wont get that deal.
I would just keep overpaying as much as you can afford each month as even when rates do go up they would have to go higher than your "OLD RATE" before you need to increase your payments.
Try and build up some emergency savings in cash ISA,s paying 3% to use on fees when you do change deals or see what your existing lender can offer you.
Think long term and if you do take a fix look at 3/5 year deals!

golfiematt

fixed rates generally cost more over the term because you are paying for the security of knowing how much you are paying each month.If you can afford your basic payment now you need to factor in what a % rise has on your payment keep playing with the figures until you can decide if its worth the gamble of when the rate goes up / weather you can afford to risk it. As to if/when/by how much? ive no crystal ball but they will go up eventually. good luck with your O.P's

Cortinaa_GTR

Thanks everyone. I've had a look at the Bank of Ireland website (my provider on SVR currently)

It has a 'switching to repayment' option that shows the interest saved on an interest only mortgae but this doesn't factor in the OP's I'm making and how I'm reducing the term. Even if got the amount I paid for the property (which I won't) I would not have enough equity to have a decent LTV so I reckon I'll stick with the SVR and OP as much as I can. Even if the rates go up if I'm continually reducing the balance then LTV ratio must be improving thus helping my position. Or I could win the lottery in the next 20 mins - here's hoping!!

LilacPixie

Well did you win??? Just pay what you can and ride it out.

Cortinaa_GTR

LilacPixie wrote: »

Well did you win??? Just pay what you can and ride it out.

I have no idea. I have this ridiculous superstition/notion that I'm never gonna be watching the lottery show as my numbers come out one after the other. I play online and don't check my emails until the following day to see if I have the 'We have exciting news about your lottery account' email when in fact there is nowt exciting about trembling as you log in to find out you've won a tenner lol.:rotfl: