Mortgage deal ending

meames_2

Hi I know noone can really tell me what to to do, I think i am just getting it clear in my head.

Background
Bought house in 2006 for £100,000 with 5% deposiit so mortgage of £95,000 . 2years at 4.95%
2008 remortgaged but interest rate at 5.95%


My deal is ending on june 30th. I have done some seaches and at my curent rates I am getting nothing as my house value is down .

Nationwide will offer 2 years at 6.49% witha house value of £93,000. This takes the payments to £652 per month.

I could just about do it but a struggle. However i don't seem to have very much choice at present.

Thrugelmir

Check your mortgage paperwork. Do you drop onto the NW's BMR or SMR rate when your fixed term expires?

meames_2

its BMR

The woman did say just letting it end naturally could be a way forward as payments would go down to £450, but obviously there is the worry prices will fall and rate will rise in the mean time.

Thrugelmir

The BMR is 2.5% and is guaranteed not to be more than 2% above BOE base. So a highly competitive rate.

By remaining on the BMR and overpaying your mortgage by an affordable amount. You would reduce the capital balanced owed and accordingly pay less interest every month. As and when interest rates rise, already by overpaying you could absorb the increases.

Base rates would have to rise by 4% in the next 2 years for you to be worse off than the 2 year fix that you've been offered.

meames_2

Thrugelmir wrote: »

The BMR is 2.5% and is guaranteed not to be more than 2% above BOE base. So a highly competitive rate.

By remaining on the BMR and overpaying your mortgage by an affordable amount. You would reduce the capital balanced owed and accordingly pay less interest every month. As and when interest rates rise, already by overpaying you could absorb the increases.

Base rates would have to rise by 4% in the next 2 years for you to be worse off than the 2 year fix that you've been offered.

Thanks - sometimes you get so blinded by numbers you can't see straight. Then there are the horror stories in the paper/news

Thrugelmir

meames wrote: »

Thanks - sometimes you get so blinded by numbers you can't see straight. Then there are the horror stories in the paper/news

Interest rates are unlikely to ever be so low again. So repaying your mortgage debt now will have long term benefits as well. Making overpayments when interest rates are high is far more difficult.