fixed rate or variable gamble

Jill_K_H

I really need some advice, I have a 200,00 outstanding on my mortgage, I have been on interest only, paying back £450 a month, because money was tight was not able to pay an overpayment. I have been offered a fixed rate interest only for five years with the Abbey at 4.74% and my repayments would rise to £868 and would need to pay £460 into an ISA, the other option is to go for a intrest only tracker fixed for two years where my repayments would be £455. Money is very tight for me and i am very unsure whether to take a gamble which is attractive due to the lower payment, any advice about what to do would be very appreciated as I am very confused
Jill

beecher2

What will you do when rates increase? If you're finding £450 difficult, what's your plan for meeting higher payments? Is the fixed rate a real option when you'd need to come up with an extra £878 a month on top of what you presently pay?

Debt free wannabee forum can maybe help you with budgeting, or come up with ways to raise money - a lodger maybe, or selling up and renting?

BOBBIs_MUMMY

We have just arranged a mortgage which is fixed for 2 years with Abbey whereby we are paying 1/3rd repayment and 2/3rds interest. Rate is currently 3.39%. Maybe this would be a cheaper option for you and a way of paying a little of the capital back??