Stay On Tracker Or Fix It ???

jonnelson2011

Hey,

Just looking for some advice on my mortgage please.

My mortgage is due for renewal in November. It will be 3 years since I moved into my first home. I am currently on a tracker rate of 1.39 above the Bank Of England base rate, so it's been a good price for myself and my partner for 2 years.

I am aware that inflation is on the up and this will affect my tracker rate. What's the best action to take, and what sort of fixed rate can I expect ??

Any other advice I should know before I call my mortgage lender ??

Thanks alot.
Jon

getmore4less

pretend you are on a higher rate and save/overpay the difference.

whats the follow on rate

beecher2

If you've got another 10 months to go, I think it is too early to contact your lender as they won't be able to offer you any deals yet. You could find out what they value your house at, which will allow you to calculate your Loan to Value. If it is high, you may have no option other than whatever their follow on rate is.

penwise

Some lenders let you book a rate - I think First Direct allows you to book up to six months in advance (and their booking rate is very reasonable at present) others may vary - Always worth checking with lender if you see a rate you like.:)

pinkteapot

jonnelson2011 wrote: »

I am aware that inflation is on the up and this will affect my tracker rate.

Only if the BoE raise interest rates. Inflation increasing doesn't affect your tracker rate directly.

It's a gamble either way. Most forecasts suggest only a small interest rate increase by the end of the year.

Depends entirely on how much more you'll be paying on a fixed rate and what you expect the base rate to do over the term of your next mortgage.

NJBSaver

As already said, it’s a gamble. Personally, I'll be taking on a two year tracker deal with a view to fixing it at that stage. Eventually, rates will have to get back to 5% but with the weakness of the economy being highlighted again and talk of a double dip recession I'm going to gamble that they keep rates at or lower than 1-1.5% for the next couple of years. If this is the case then a tracker should work out cheaper than a fix rate deal.

I'll probably be back on here with egg on my face in two years when interest rates have hit 3.5%.

jonnelson2011

So do you think it would be best to just sit on my tracker until November.

What would then be my situation in November. Would my current lender put me onto a reasonable rate, or would it just be a case of shopping around ??

Cheers.

beecher2

You haven't posted details of your Loan to Value - this is fairly crucial in deciding what to do. Wait until Easter and re-evaluate. Have a look at your paperwork and find out what your follow on rate is at the moment.

also check to see if you have an Early Repayment Charge if you're thinking of changing deal before November. Ask your lender if it is possible to come out of your deal, and what they could offer you if you did so. Then weigh up whether it is worth it or not.

dimbo61

You need to read the paperwork that came with your mortgage!
You have not given your lenders name?
What does the mortgage rate revert to at the end of the tracker deal in November?
Is it the SVR ( dont forget the paperwork is now over 2 years old!!!) check online to find out what your lenders current SVR is.
Not with Nationwide so some of the other lenders who have an SVR/BMR of 2.5% are you?
You took out this deal just before the Bank of England base rate went from 5.5% to 0.5% so have you paid the higher mortgage payment for the last 2 years and what deposit did you put down?
Whats your place worth today, whats the LTV now and how much will you have paid off after 3 years. Use "whatsthecost" to work it out
You need to do your homework and give the figures so will can point out the best deals

jonnelson2011

My mortgage is with HBOS. My current tracker is 1.39 above the base rate.

I have checked my paperwork and at the time of print (Oct 2008), it says :

35 payments at a variable rate, currently 5.890%
followed by
384 payments at a variable rate, currently 6.500%

The early repayment charges are :

On or before 30/11/2011 : 2.000% of the amount repaid.

I am unsure what is meant by LTV ? Loan To Value ?
And I am unsure what my lenders current SVR is ??

Thanks.

kabads

I'm taking the gamble and staying on my variable tracker. I've got 3 years and 10 months of mortgage left (£44k still outstanding). I'm managing payments easily and can overpay each month. My rate is 1.69% + base rate. With some of the fixed rates look around 3+ percent, I'm going to expect 2 jumps of 0.5% or 4 jumps of 0.25%.

My personal belief is that the first jump will be around the 0.25% level and will come a lot later in the year, if at all this year. However, I don't think it will get to the 5% mark in the lifetime of my mortgage. In the worst possible case, I could cash in some ISAs and pay off 1/2 the mortgage to bring the interest down, or talk to my lender (First Direct) about increasing the term to bring the payments down.

Obviously, this is just my situation, but to help you to decide what you should do, you should think through similar factors for your own situation.

This article came out last weekend, and summarised it with:
"Mark Harris says the advice remains: if you need certainty, go for a fix. 'If you can afford to experience any moderate interest rate movements, then select a tracker/variable product.'"
http://www.guardian.co.uk/money/2011/jan/22/will-interest-rates-take-off