Should I ditch my fix rate mortgage now?

meercat01

Hi, this is my first post on here and wondered if anyone could advise me of what to do for the best regarding my mortgage. I am currently on a 3 year fixed rate deal with Yorkshire BS at 5.59%. This is until 31st October this year.
I have used the Mortgage calculator and it says I would need a deal of 1.03% to make this worth while as my Early Repayment Charge is £2,687. Length of mortgage is 14 years and still owe £89000 on a house worth £289,000. So I assume it would be a bad idea to move now?

In my paperwork issued from YBS it does state however that if I switched to one of their own products prior to 31st October 2011 then I wouldnt incur a charge. So I have been on their website and found a 2 year fixed at 4.19% but it states on there that I would have to pay the ERC before transferring so I am confused now!

The only reason I am even looking at this right now is because the rates could shoot up by the time I need to be looking. If I could switch to YBS lower rate fixed without having to pay the ERC on my current arrangement, would this be a good move or am I best sitting it out and hoping that the rates dont go any higher than the 5.59% that I am currently paying?

Any help would be most appreciated.

Thanks very much

getmore4less

Phone YBS and ask what they have for you without ERC's

What is the follow on rate for your cuurent deal?


Don't forget with a lot of lenders you can book the deal in advance 6 month is not uncommon so only 2 month away.

Also ask yourself do you need to fix

Also ask why you think a new 2 year fix is a good idea.

meercat01

Thanks to getmore4less for your advice.

The follow on rate for my current deal will be 4.99%.

Is there a fee to secure a deal 6 months in advance? Even if there is, Im sure it wil be cheaper than paying out ERCs!

I will phone YBS to see what they can offer me without ERCs and if get no joy then will look at securing one in a few weeks time instead.

Reason I opt for fixed is because I like to know I can afford the mortgage payments every month.

Thanks once again for all your help and advice.

dimbo61

If you are looking at a fixed rate deal why not think long term and get a 5 year deal! Don't pay ERC and see if YBS will allow you to book 6 months ahead.

slummymummyof3

YBS seemed to have really steep arrangement fees for their fixed rates a few months ago; whilst other lenders were reducing theirs. We were initially going to take out a 5 year fixed rate with ybs but then swapped over to HSBC as the arrangement and other associated fees were far lower.

With that LTV you should be able to get a good deal. We managed 3.94% fixed for 5 years as we only have 40% LTV. YBS wanted to charge a valuation fee, legal fees and we would also have needed to apoint our own solicitor (overall was going to cost £1350 to YBS + our legal fees) whereas with HSBC we had no valuation needed, and no legal fees. Don't know how you would stand wanting to book this far in advance with another lender though - sorry!

dimbo61

you are already with ybs so wont have valuation fees or legals but will have fee to take long term fix
best talking to your lender first and then looking at what else is on the market.
ybs have deals for existing customers which are fee free

meercat01

Thanks for your reply and you did really well getting a rate of 3.94%! Will phone YBS tomorrow and see what they say and then take it from there.

dimbo61

On the YBS website they have a 3 year fix for existing customers of 4.59% fee free but if you want longer you need to talk to them on monday.
Have you checked what your mortgage reverts to at the end of the fix ? is it the SVR or a tracker of BOE base rate plus 0.75% PLUS COLLAR by any chance

meercat01

dimbo61 wrote: »

On the YBS website they have a 3 year fix for existing customers of 4.59% fee free but if you want longer you need to talk to them on monday.
Have you checked what your mortgage reverts to at the end of the fix ? is it the SVR or a tracker of BOE base rate plus 0.75% PLUS COLLAR by any chance

My mortgage reverts to the SVR at the end of the fix. Did see the 4.59% for 3 years fixed but wasnt sure if that was a good idea to tie in for another 3 years. When I did my current 3 year fixed rate, shortly after the rates dropped and I was kicking myself for doing it for so long!

slummymummyof3

It depends whether you are after long term security - is it important to you to know where you stand financially?

We considered that rates have only one way to go and that stability may take several years to return. Fixing at 3.94% for 5 years suits us fine. I must admit we were a little peeved with our previous 5 year fixed at 5.59% (came to an end last June) when the rates were dropping left right and centre. However, we remember only to well the interest rates of 15% when we bought our first house!

meercat01

slummymummyof3 wrote: »

It depends whether you are after long term security - is it important to you to know where you stand financially?

We considered that rates have only one way to go and that stability may take several years to return. Fixing at 3.94% for 5 years suits us fine. I must admit we were a little peeved with our previous 5 year fixed at 5.59% (came to an end last June) when the rates were dropping left right and centre. However, we remember only to well the interest rates of 15% when we bought our first house!

Yes it is important to me to know where I stand financially so would probably take up a 5 year fixed deal if the rates are still set to be climbing for quite some time. If I could get 3.94% for 5 years I would be very happy!

Unfortunately I cant do anything about it right now as Ive just spoken to YBS who I am currently with and I will definitely have to pay the ERC to even transfer to one of their own products so will have to wait until maybe end of April (my fix doesnt end until end of October) and hopefully secure as good a deal as I can then.

Not sure how it works though securing a mortgage 6 months in advance so any advice would be very much appreciated.

Yes we were peeved too when the rates kept dropping and dropping after we had taken out the 3 year fixed!