Advice Needed - Deal Ending & Base Rate Predictions

Offerman771

Hi All,

I know this question has been asked loads of times; and despite having a good search through the forum I can't really find anybody else having the same circumstances - so I thought I'd ask again.

My mortgage deal with Nationwide ends in June, and I revert to their BMR at 2.50%. Today I sat down with a Nationwide mortgage adviser to ask for advice and she predictably said that if I want payment security I should refix now, however if I am happy to take a gamble I should drop onto the BMR.

My house is worth about £160,000 (based on current land registry sales prices), and I owe £116,000, so my LTV is about 71%. Currently my monthly repayments are £663, and I always overpay by £200. The term was 35 years (now 33 obviously).

If I drop onto the BMR, my payments will be £430, and by overpaying £400 to maintain my current monthly payment amount I figure I can really smash off some money...

I've no concern about a token base rate rise of 0.25%, or 0.50% within the next few months because it will be a long way off the 5.39% I was currently paying. But I do have concerns about what the BoE plan for rate rises within the next 2 years. Although to be fair the base rate would have to be 3.0% to equal my current fixed rate - and I doubt this will happen for the next 18 months.

I am currently 23 and really just want more equity under my belt so me and my partner can upsize in the next few years, but am I being to naive with my views and should I just refix whilst the rates are low????

ellives

Hi

Been in a similar position as you of late....have gone for an HSBC lifetime tracker @ Base + 1.79%.

Anyway, I found this a useful source of information re: future BoE rates:

http://www.thisismoney.co.uk/interestrates

Good luck

Thrugelmir

Offerman771 wrote: »

I am currently 23 and really just want more equity under my belt so me and my partner can upsize in the next few years, but am I being to naive with my views and should I just refix whilst the rates are low????

Providing that you are comfortably with the risk, as it seems you have thought have the matter through thoroughly. Then overpaying by £400 a month and accelerating repayment of the mortgage makes perfect sense. As you'll find few lenders that will be offering 2% above BOE base in the future.

While interest rates may rise. Reducing the balanced owed reduces interest charged. So over the time the impact of rate rises diminishes.

Offerman771

Cheers Thrugelmir, its much appricated. I just wanted to make sure I was not being too short sighted.

And Ellives, that looks like a great product. Do you know what sort of LTV you need for that product? If I had 70% would that be sufficent? Products like that usally demand high levels of equity I thought?

Also that website is brilliant! I have been monitoring it for months. Hence my predictions for only a small token rise this year, with the larger ones next. I just hope thats how it turns out...