Looking for 5 yr fixed with good overpayment facility

casper2010

Hi

Coming to the end of a 5yr fixed which then has a follow-on product of +0.99% BoE tracker for life (ie currently 1.49% if no BoE rate change)

Whilst I think it is a good product I wanted to check out options due to the niggling fear of rates being 5% or more within 18 / 24 months when all the good fixed rates may have gone.

One of the appealing features of the tracker is the unlimited overpay facility so I was wondering if anyone knew of the most flexible mortgage with a 5yr fixed rate of around 4% so I can over pay as much as possible.

£130,000 Mortgage
£330,000 Property Value

Many thanks
Casper

Thrugelmir

Do you believe that you'll be able to obtain your current tracker rate again in the future?

The follow on rate of a current 4% 5 year fixed term product are well above 1% above base.

nell53

I believe you can overpay as much as you like with the Skipton,and they have a pretty good fixed rate at the moment. Can't remember exact details but they are on the website.

casper2010

No I'm sure I won't get the same tracker deal.

But it is a gamble how high the rate will go when it begins to rise.

If it rises steadily over 5 years thats not so bad. But if it goes up rapidly over the next two years then it may be better to fix now at what are good rates.

Perhaps I am being slighlty short sighted not thinking about the post fix period?? BoE+0.99 probably wont be on offer again for a while yet.

I know no one has the crystal ball but was just picking brains for the most flexible fixed product about at the moment as I am hoping to overpay every spare penny next year.

Have never had a tracker - always went fixed so it is the uncertainty getting me worrying I think.

Thrugelmir

casper2010 wrote: »

Perhaps I am being slighlty short sighted not thinking about the post fix period?? BoE+0.99 probably wont be on offer again for a while yet.

I doubt that you will see that level of rates again in your lifetime.

Remember that interest is calculated on the capital balance owing. So the less you owe the less interest you are charged. The less impact future interest rate rises will have.

The example I always give is thats it cheaper to repay £130k at 6% interest than £150k at 4% over a 25 year term.

So if you can afford 4% fixed rate and make overpayments. Then my suggestion would be to opt for the tracker rate and overpay by as much as you can reasonably afford.

At a mortgage interest rate of 1.49%, you could currently opt to deposit the "overpayments" into an instant savings account that offers a higher rate (net of tax). Thereby earning more interest than you are paying. As and when rates do rise you can transfer the balance to reduce the mortgage.

casper2010

Thanks for the replies.

Going to keep the tracker and save as hard as possible.

Cheers

Thrugelmir

casper2010 wrote: »

Thanks for the replies.

Going to keep the tracker and save as hard as possible.

Cheers

Good luck.

Repaying a mortgage is a marathon not a sprint. So joining the MFW board is well worth while to keep oneself motivated.

dimbo61

I have a fixed offset mortgage with YBS and they have a 5 year deal at 3.69% and an offset deal at 3.79% ( Fee £1495!!!)
Now the reason I mention the offset deal is IF you can afford to overpay big style this may be a good deal for you to either overpay or build up savings in the offset.
I have cut my mortgage in half over the last 5 years and love offset mortgages

Thrugelmir

dimbo61 wrote: »

I have a fixed offset mortgage with YBS and they have a 5 year deal at 3.69% and an offset deal at 3.79% ( Fee £1495!!!)
Now the reason I mention the offset deal is IF you can afford to overpay big style this may be a good deal for you to either overpay or build up savings in the offset.
I have cut my mortgage in half over the last 5 years and love offset mortgages

I'm think that the OP will benefit more from having a 1.49% rate. Rather than incurring a large fee, using the money to reduce the mortgage.

uzubairu

Thrugelmir wrote: »

At a mortgage interest rate of 1.49%, you could currently opt to deposit the "overpayments" into an instant savings account that offers a higher rate (net of tax). Thereby earning more interest than you are paying. As and when rates do rise you can transfer the balance to reduce the mortgage.

We have a First Direct Base Rate tracker mortage and all our overpayments go in 6 Regular Savings accounts ranging from 4% to 8% gross interest.

With the OP's excellent LTV First Direct have a decent Offset Mortgage and a £99 arrangement fee.

dwsjarcmcd

Just one point to add. The OP assumes that if the base rate increases it always follows that fixed rates will follow to the same extent. They may but they may not.

Fixed rates are funded from the money makets and not base rates and are costed against where rates will be in the future, not today. So you may take out your fixed rate in a few years when base rates are at, for example 5%, but that doesn't mean that fixed rates will be a margin above that, say 8%. They could be anything from around 3% to 8% depending on the economic conditions and how long you intend to fix for.