advice please

marvy83

hi,
me and my partner purchased 80% of a house and due to having very little deposit was on quite a high repayment mortgage, it is £739 i month for a £129,999 house. we are due to finish the 2 year fixed term and are uncler what our best options are.

Nationwide (our current mortgage lender) has made us various offers:-

variable rate - 2.5% =£465 a month

two year fixed - 4.99% = £647 a month

three year fixed - 5.29% = £671.13 a month

i am considering taking the BMR one however i have been concerned with the news lately stating that these are likley to increase. Any advice would be gratefully recieved.

Thrugelmir

Could you afford to continue to pay £739 per month?

marvy83

hi, thanks for the reply

yeah the payments arent a problem, but as with anything i would like them to be less

Thrugelmir

Personally I would take the BMR then . Maintain your repayments at £739. Then until base rates move you'll be repaying an additional £274 of capital from your mortgage every month. Plus you'll be reducing the amount of interest you are paying.

As base rates rise, which they envitably will, you will be able to absorb the increases. Without changing your repayments.

I understand why you want to reduce your outgoings. However while interest rates are low it would be better to clear the mortgage debt. As you'll never get a better opportunity than the current time. Try and take a longer term view.

marvy83

thanks for the advice, i was concerned that the BMR would increase to above what i am paying at the moment.

although it will be hard i am going to take your advice and make overpayments, like you said we will be glad in the long run.

thanks again for the speedy reply

getmore4less

The best protection against higher rates is a smaller debt.

Any fixed rate only protects you for a short number of years.

Also base+2% is currrently a good mortgage to be on so take advantage of it while you can.

Note the follow on nationwide offer on the new fixed rate they have offered you, even they think the B+2% is good so no longer offer it.