Good time to fix?

Jaybee5

Hi folks,

I know that this is an individual decision, but would welcome your views on what you'd do in my position.

We have a mortgage of approx. £248k on a property recently valued at £425k. We're on a tracker with Nationwide (approx. 3.5% interest rate) with a monthly payment of £1553.

We are due to have a second baby in May and are conscious that this will bring additional expense so it would be good to have a fixed rate for peace of mind more than anything. We have some tolerance in our income to absorb a rate increase, but a big increase with a new child would leave us struggling.

I would appreciate your views on whether you think its a good idea for us to stay on the tracker or fix in now. (We do have this option with our Nationwide mortgage).

Thanks!

dimbo61

Sounds like a good idea but what are they offering you ?
As you have a LTV of 60% have you looked at the 5 year offset fixed with YBS at 3.79%
Long term security and ability to build up savings in the offset account
But there is also a £1495 fee and costs to move lender so see what Nationwide can offer you
Rates have never been this low!

[Deleted User]

In your situation, I'd go a 5 year fix if you can get one around 4%. Big mortgage + children + uncertain econmic climate would have me running for shelter.

Jaybee5

Nationwide deals are looking like 4.69% for 5 years which is approx £150 extra per month or 4.09% for 3 years, an extra £75 per month. These are not as good as some RBS and HSBC deals i've seen around, although the 'fee' is only £99 as we're existing customers. Hmm still not sure yet...

dimbo61

First direct also have a 5 year fix at 3.89% and the fee is £99 with a max LTV of 65%

Peelerfart

dimbo61 wrote: »

First direct also have a 5 year fix at 3.89% and the fee is £99 with a max LTV of 65%

Given the OP's circumstances quoted that sounds heaven sent to me :T

Jaybee5

Thats an excellent deal but I need to check the fine print on my current mortgage as I think there's an EPC to consider.

spud211

Definitely take a look at any early repayment fees, and then the product fee..and do the maths.

I think that you definitely want to move your mortgage - 3.5% seems quite a high rate at the moment when you have 60% LTV..even considering the size of the loan. My mortgage is half yours but with 75% LTV and I fixed for 2 years on 3.49%..so I think you can do better.

That first direct deal sounds like a dream - I'd suggest talking to a broker though and get them to work out the details, they may even get you a better deal with nationwide

shortchanged_2

One thing you may need to factor in will be increased childcare costs, possibly for the next 4 years or so. So maybe the added security of a fixed rate in your circumstances might be wise. As other have stated you should get good deals with your LTV and don't forget there is only one way interest rates are eventually going to go.

Jaybee5

Thanks Shortchanged. We're lucky with childcare costs as one will start nursery as the other starts school (give or take a couple of months), so we'll be paying roughly the same. We've got enough in the pot to cover a 1-1.5% increase without feeling much pain so its a question of whether we take a gamble. Although my appetite for risk is reducing with another mouth to feed!!

I appreciate the advice folks thanks.

Thrugelmir

I would recommend overpaying your current mortgage if you can afford it. As you'll have a significant mortgage balance for a considerable length of time.