What to do?!

lil_louus

Hello
Could do with some opinions please!

We have a £111k outstanding mortgage with First Active on SVR 1.1% above BR for life, paying £502 atm (house worth approx £150k)- Im worried about rate changes as we have 2 kids and loan payments for the next 2-3 yrs. Could stand a 1-2% rate change but would be stretched after that, cant really save much to offset..

Im thinking of perhaps looking for a 2-3 yr fixed deal so I know where we are at until the loans are paid off. Been looking at FD & YBS mortgages.

Any advice greatly appreciated.
TIA

FinAdv

Hi,

You have a pretty good rate for life.

There is alot of talk about increase in the IR but obviously no one knows when its going to take place and by how much.

What kind of rates do you qualify for 2-3 yrs fixed?

If the difference is not much between your SVR and the fixed deal, then it may be worth thinking but if the difference is high than there is no point as you may be stretched as you mentioned even before the IR rise.

Regards

lil_louus

2-3 yr deals are working out at about £600pm or a 5yr deal at £650 with FD, if IR rate went up to 5% (+1.1%) then I would have to pay £800.

I think Ive prob answered my own question lol

Accountant_Kerry

its going to take at least 2 years for interest rates to return to 5%.

FinAdv

Yes you have. You should be looking at 5 yrs for peace of mind.

As we can read in the news everywhere that the IR might increase by 10 times so it be as high as 5%.

£650 still doesnt sound bad. Its higher than £500 but its lower than £800.