age old question: to fix or not to fix (rate)

sheba

Hi there,
I am very UNsavvy when it comes to mortgages but nevertheless think managed to niavely do the right thing when we intially took out our mortgage (11 years ago in May) and have never struggled nor considered changing mortgage provider agreement. But am aware that sometime soon the base rate MUST go up and so wonder if I ought to be seeking advice as to whether to remortgage at a fixed rate or not. Have come here for the very beginnings of research to just sound people out.

Current situation:
Have 2 mortgages secured on the same property later one (mort 2)due to finish in June 2026 and earlier one (mort 1)*around* May 2025.

Mort 1 as of Sept 2010 owe £33,642.15 on a Repayment tracker mortgage set at 1% above base rate

Mort 2 as of June 2010 owe £17,164.84 on a Repayment tracker mortgage set at 0.5% above base rate

so, say of Sept last year total owed: 50,806.99

Property conservatively valued (by me an err on the side of caution type of girl) , based on online research of local property prices (bearing in mind asking does not necessarily get!!): 110,000

never missed a payment, never asked for a payment holiday, never any problems paying mortgage(s) (but then never overpayed either) and see no foreseeable problems even when base rate goes up.

Not really sure what I'm wanting really- just advice as whether you would expect rate to go up stupidly high and so would then suggest locking in at, what I gather most lenders offer is about 5%, or ride the increases hoping they never get much above 5% anyway.

Sorry if this is garbled and shows my honest ignorance I just would like to at least feel I have made a decision on the subject ahead of the expected rises, rather than just rely on blind luck as we did when younger.

Grateful thanks in advance of any suggestions/ advice offered

Sheba

hillcats

well you are not going to beat those rates - thats for sure...
I would suggest you're better off staying as you are like us.

opinions4u

Assuming they track forever, stick with what you've got!

Consider saving / overpaying while rates are low - getting the debt down so that rate rises hurt less.

sheba

Yep meant to say they are whole of term trackers. Thanks so much for your advice, that and reading around this board has made me feel far more informed so I think we can relax and not worry too much about future base rate rises- if it does rise to something stupid like 10% the country will likely self destruct/revolt so my little problems wouldn't matter anyway. Reading around here I feel really inspired to try to overpay and try to reduce the term a bit, theoretically possible as sons of 20 and 17 contribute in now rather than take out of family, which is fab, however lovely hubster adopted two more 'kids' namely a kite buggy and a T4 vw which cost more than the blessed flesh and blessed kids ever did!!! But he's happy so I'm happy- will just try to syphon some money off from those hobbies.


Thanks so much for responding and good luck to all those MFW's!!

Joe_Bloggs

I agree with opinions4u and hillcats. I am on a moderately good BOE tracker. What I hope to achieve in the next two years is an equality between the balance of my savings and the mortgage. Once I have equal amounts of savings and mortgage then interest rates do not matter significantly.

You can chase better savings rates to compensate for an increased mortgage rate. Alternatively you can pay off the mortgage amount if it makes financial sense to do so.

Having a savings cushion and building it up helps me to cope with the prospect of uncertain interest rates in the future. Savings are also an insurance that can help with unforeseen circumstances.
J_B.

sheba

Yep I totally agree that substantial savings would alleviate any strain brought about by rates rises- had a bit of a scare financially last year with threatened redundancy (did not come to pass), which hit our meagre savings hard (which in big part is why I want to be sure I am in the know about our financial things and feel for better or worse I made an informed choice about things), but am in the process of 'rebuilding' a safety pot of savings as want to be in a better position than was if those threats were to ever be materialised. Thanks again

Joe_Bloggs

Dear Sheba,
The threat of redundancy would tear my long term plans to shreds like most people. I see no option other than to make savings a part of a budget rather than something that is left over after all other expenditure.

One thing to consider it to keep a squeaky clean credit profile in the event of having to re-mortgage. This takes a lot or organization. Quite often mortgages are turned down apparently due to a once used mobile phone account that was never settled satisfactorily.

Credit check yourself and learn from the mistakes and successes of others on this site. Don't attempt saving when you have debts at a higher interest rate.
Regards J_B.

frugalfreda

I like your post as I can relate to a lot of what you said. I am in a similar situation with regard to wondering whether to fix or not. Have had mortgages in total now for nearly 10 years - this is my second mortgage (i.e. second house move), now joint with my husband. Have been lucky in that I/we have made the right choice with mortgages in my mortgage life (mainly from naivety!) but now wondering if my next move will be the right one.

Have been on tracker of 0.75 above base rate since March 2009 (with no expiry date - assuming of course that lender decides not to withdraw it..) and wondering whether to fix at 3.89 (First Direct) or 3.99 (HSBC) for 5 years.

Hmmm, decisions. 3.99 would push our mortgage payments to a limit that I am only just comfortable with paying (we are on a reduced term to try to cane the mortgage) so really that answers my question.... so thinking of paying the booking fee on one of these just to have peace of mind for 6 months and then see what happens with rates...

dimbo61

Your £51K mortgage over 14 years at 5% works out at £422 a month so if you paid that off the mortgage each month you would be overpaying and building up overpayments which you could use if you needed a "payment holiday"
I know you can get 2.9/3% from ISA savings but if you OP the mortgage you are much less likely to spend the overpayments!
As others have said clear expensive debt then build up the emergency pot 3/6 months of income and then OP the mortgage

sheba

Thanks for the number crunching there dimbo61 - that is incredibly helpful. Your last sentence is exactly the plan! We do have some debt accrued but none of that is generating interest (well a loan with 16 months left to pay that has interest built in to the repayment but no debt costing us more than the debt itself if you know what I mean?? Good luck if you do!!) and are now in a position to hit that hard and get it down asap, at same time I am building up reserves (just in case- of course I would use any reserves I needed to if I was in a situation where I was going to start paying interest or a purchase would cost me less to be paid for outright. When debt is cleared I hope to have sone reserve built up and immediately then i could use some of the reserve to overpay mortgage and then continue to overpay/ rebuild a reserve. Thanks for all your advice re my mortgage I really appreciate it! You've all really helped me be confident about not tying in to a fixed rate mortgage