variable or fixed struggling to decide HELP

mattydon999

Hi
My mortgage is due to end at the end of April, I have negative equity in my home due to the fall in house prices.

I am struggle to decide whether to agree a new fixed rate for two years which will have a cost to it which can be added to my mortgage or to chance keeping on my current deal and go on a variable rate

If i stick to variabe i am at the hands of the intrest rate. Can anyone advise me are intrest rates expected to rise alot in the next twelve months.

CloudCuckooLand

No point paying for a 2 year deal. Either consider 3-5 years, or stick to tracker and pay attention to rate changes.

Rate rises may start in the summer/autumn, according to the markets. How quick things will move once they've started, who knows..?

beecher2

Has your lender offered you a 2 year deal? What's the rate, and how much are they charging? What's the variable rate?

No matter what your decision is, you need to overpay or save in order to get out of negative equity. You can't just think of the short term - you need a plan to pay back the capital.

mattydon999

The 2 year deal is at 5% and the variable is at 3,3% wont be in a possession till next year to over pay but that is my long term plan

beecher2

I don't see the point in a 2 year deal, especially if there's a fee attached. Presumably 3.3% is less than you presently pay, so make sure you use the savings wisely.

mattydon999

The saving will be £200 a month but im seeking advise if it is likely interest rate is going to rise alot with in the next twelve month meaning my fixed rate they have overed me will be less then the variable in the future

alexlyne

Is this advice you're getting guaranteed? all I have is a crystal ball and news in the internet.. and still know it is only likely that they will go up this year and probably not by much... but it is still only guesswork, and that is clued up financial people, or so they say.

beecher2

mattydon999 wrote: »

The saving will be £200 a month but im seeking advise if it is likely interest rate is going to rise alot with in the next twelve month meaning my fixed rate they have overed me will be less then the variable in the future

Who knows. You wouldn't have found many people who would have guessed that base rates would go down to 0.5% before it happened, and likewise no-one knows what will happen in the next 2 years. You need to weigh things up yourself. I would advise going on to Debt Free Wannabee forum for help with your budget so as overpaying/saving is a realistic option now, rather than a long term plan.

dimbo61

You have been paying the same mortgage each month for the last 2/3 years and when your current deal ends you are going onto the SVR which will save you £200 if the rates stay the same.
simply ask your lender to keep your mortgage payment static and you will feel no difference to your normal bills.
If rates do go up you have a built in safety net until rates go higher than your current fix!
In the mean time you are overpaying your mortgage