what to do with regards to re mortgage?

lorny80

dimbo61 wrote: »

If your SVR is 3.5% you only need 2 rises of 0.5% before you are very close to the 5 year fixed deal so do you think there will be a rise of 1.2% in the next 5 years! I do.
I have just finished a 5 year fix and am sitting on a tracker deal but rates would need to go over 3.5% before I would be better on a fix!
3 young kids and one income !!!! I would take the long term deal over 25 years but overpay each month like it was 20 years. ( builds up an overpayment fund ) GOOD LUCK to you and your family

thank you!
that was a really nice message to my family.

Radionotme

It's a bit more complicated than if rates will ever go up enough to match the fixed though. Overpayments can be made now while the rate is lower, reducing the impact of rate rises, and its the average rate of the term that's important, not whether it ever goes above the fixed rate.

lorny80

Radionotme wrote: »

It's a bit more complicated than if rates will ever go up enough to match the fixed though. Overpayments can be made now while the rate is lower, reducing the impact of rate rises, and its the average rate of the term that's important, not whether it ever goes above the fixed rate.

can you expalin what you mean in sliglty more stupid person readable type terms?
im confused.

Radionotme

Let's say that you owe £100,000 at 3.5%
Each year you'll pay £3,500 in interest.

If you took a fixed term of 5 years at 4.69% you would pay £4,690 in interest each year.
Over 5 years, that's £23,450.

If rates rise by 0.5% per year, then that's
£3,500 in the first year,
£4,000 in the second year
£4,500 in the third year
£5,000 in the fourth year
£5,500 in the fifth year.

Total = £22,500, interest is now 5.5%

So, rates shot up above your fixed, yet you were still better off on the variable rate.

That's way simplified though, and rates won't rise in such a straightforward manner.

Wh05apk

Radionotme wrote: »

Let's say that you owe £100,000 at 3.5%
Each year you'll pay £3,500 in interest.

If you took a fixed term of 5 years at 4.69% you would pay £4,690 in interest each year.
Over 5 years, that's £23,450.

If rates rise by 0.5% per year, then that's
£3,500 in the first year,
£4,000 in the second year
£4,500 in the third year
£5,000 in the fourth year
£5,500 in the fifth year.

Total = £22,500, interest is now 5.5%

So, rates shot up above your fixed, yet you were still better off on the variable rate.

That's way simplified though, and rates won't rise in such a straightforward manner.

Basically what he is saying is that the SVR will need to average over 4.69% for the 5 years to make it worthwhile fixing.

lorny80

Wh05apk wrote: »

Basically what he is saying is that the SVR will need to average over 4.69% for the 5 years to make it worthwhile fixing.

ah!
see, that i understood.

Radionotme

Wh05apk wrote: »

Basically what he is saying is that the SVR will need to average over 4.69% for the 5 years to make it worthwhile fixing.

and its the average rate of the term that's important, not whether it ever goes above the fixed rate.

Didn't I say that?

kingstreet

C'mon chaps.

Don't forget the intangible feeling and warm glow a lot of people get from knowing their payments can't go up if rates rise.

We can all guess what might happen and make black and white choices that if the average SVR is higher for more than 50% of the term of the fix you're better off on the SVR and vicky verky if it isn't.

At the end of the five years, you might make money, or you might lose money. But how many of us advice clients to go for a fix because we think they might buck the market?

lorny80

is there any way to find out the past 5 yrs worth of svr's?

kingstreet

I don't know of a site where they are published, so I've just had a gander back through a few KFIs to see what SVR was when I did different cases.

Halifax

02/2006 6.5%
04/2009 3.5%

C&G

12/06 7.0%
04/09 2.5%

I don't know if the last five years will be reflected in any way in the next five?