Fixed rate ending soon

ian_p_4

Good evening
This is my first post. Hoping to get a bit of information on the best way to go. ( I do know that the question I am asking is a “how long is a piece of string”) But wondering if you can advise some options.

Took our first ever mortgage out in 2006 (fixed rate mortgage for 5 years), this is ending in march 2011. As this was our first mortgage we decided to fix as we know what we had to pay each month, (Piece of mind). We are able to afford out current payments and put a fair bit away in to savings each month. We are happy with the house, and there is a option to extend on the an existing extension to make it a 4 bed.

Our current mortgage is with Nationwide and after our fixed rate of 4.79% we drop to their BMR (guaranteed to be no more than 2% above the Bank of England Base Rate)
So after the fix rate we drop to 2.5%, this would drop our payments by £150 per month
We also have the option to make overpayments of upto £500 per month. (currently we put money in savings and do not overpay). I rather have this in a bank account for the “just in case”

The place we got the mortgage with first off tried to get us to sign up for a off set mortgage, with our savings, but this was at 3.5%, so 1 % more then what we could be on if we stayed and went on to the BMR rate with nationwide.
To me this sounded like I was going to pay 1% more than if I stayed put.

I have been to Santander (bank with them) and they are saying that the deal for me is
They first off said a 2 year fixed at 3.49% with a £495 setup fee, I felt I may as well stick where I am with this,so then offered the below.
5 year fixed rate, at 4.49%
Setup fee £1000
Works out to be £20 under what w are paying now (on fixed rate)
I think the £1000 setup fee is a lot, we did not pay anthing like that when we took out our first one.
After the fixed rate we would go onto Santander variable rate currently 4.24% and this is not capped in any way.

The figures to remortgage are
House valued at £170,000 – £175,000 (estate agent has valued and said advertise for £175,000 to expect around £173,000.
Mortgage required = £123,000

So question is stay on the tracker at a guaranteed no more than 2% above base rate or switch to a fixed.
If anyone else can recommend a good deal on a mortgage I would appreciate it.
Thanks
(hope I have included all the info).

GMS

The rate you will revert to is great and is not likely to be beaten.

However this rate can change in line with any rise in Bank Base Rate. Rates are going to rise, it is a question of when not if.

When the rates rise the fixed rares available today will be a thing of the past. Now may be a good time to get on to a decent fix even if it looks mad now, it may pay off in the longer term.

If you are happy to take a chance on a variable rate then go for it.

whatyadoinsucka

my situation i spoke to 2 mortgage advisors (oct 2009) they both said get a fix (piece of mind etc etc) then i went to see a family friend mortgage advisor he said get an interest only with unlimited overpayment hsbc i'm on 2% plus BR (2.5%)
16 months later i'm still on the variable at 2.5% and our mortgage is down £20k to £105k, by november 2011 the mortgage will be at £99.999k i should then have 33% LTV, thus better rates will become available.

therefore what is your situation, are kids around the corner, big holidays planned, jobs/industrys secure..

personally I'm gonna stick it out on VR until I'm down to the lower LTV and the better rate.
If your gonna fix go for a 5 year, a 2 year fix at 3.5% with fee is a waste of money as you'll be no better off after 2 years when rates will have almost certainly gone up. and you need a new fix.

the five year at 4.5% seems reasonable but on £120k in the first year you are overpaying 2.00% extra for this year £3,400 with no change in base rate if base rate goes upto 1% you are still saving yourself a minimum £2,200 this year
and base rate won't hit 1.5% this year

I'm guessing the base rate will hit 2.5% within 5 years so in the latter years you'll save money.. but you're overpaying in the early years

ps. you need to consider if your estate agent valuation resembles a banks 'valuation'
pps. the long run mean you will always pay off you house quicker by paying variable, but its a risk, are you risk averse

Burridge60

Offsets are great if you want a long term one choice mortgage option and stick with it throughout your mortgage lifetime. they work out cheaper the longer you have them and if you could get 3.29% on your savings you would bite someones hand off right now.

Used properly they can be your future car finance without a bank making any profits from you.

Offsets usually come with a premium but I would be loathe to leave a 2.50% rate with a BoE link right now

ian_p_4

Thanks for the replys, We are going to see our current lender to see what they have to offer us, but thinking that the 2% above the BOE rate is above, and over pay.

Radionotme

I'm looking forward to getting onto Nationwide's BMR next year, and hopefully reducing my current 5.98% fix. Of course, by that time rates could be back at 3 or 4% and 2% over puts me back in the same place.

By the way, it's "PEACE" of mind ;-)

GuidoT

I have had a similar Nationwide deal with that 2% collar for the past year, previously the mortgage was 5.5% fixed for 5 years.

I would stay where you are for now, no present deal will better what you will revert to.

Rates will of course go up eventually so you need to keep up an eye on them to the point where you are uncomfortable with the risk that they pose.

SVRs used to be our enemies, now they are our friends, I have mortgages with the Nationwide, C&G, Woolwich (Barclays) and Cheshire, they were all trackers or fixed and now all good SVRs or lifetime trackers of the base rates. I used to pay around £4K month, now I pay about £1.2K.

ian_p_4

Saw nationwide today and they said that the could get us on to a fix rate, but would be paying more, and would no longer have the following

BMR - 2% above base rate
Payment holidays - not sure what this is, so will check back over our documentation
Unlimited overpayment - Once fix rate has ended we can overpay any ammount no fees, new mortgages this is now capped
Borrow back -any over payment we make we can with draw this money if needed.

Person was honest and said if we over pay, we will end up getting our LTV lower so if we decide to fix later we should just get under the 70% bracket which opens up better rates.
We are happy to do this, it seems by taking out a new mortgage we would loose all the options that we currently have and be paying more. (until the rate rises).