5 year deal up in June - What to do now?

rosscouk

Hi all, I am back after a few months. My deal has expired and I just had a notice from nationwide that my mortgage will be reverting from my 5 year fixed rate at £910 (5.08%) to a BMR 2.5% rate which equates to £665. A nice drop which will help the family. I also thought I would check to see what nationwide are now offering me and the deals seem more favourable than in april. There are currently offering.

1. 2YrTr_C SMR Only Information 3.59%. £734.46pm. £999.00 fee
2. 3YrTr_C SMR Only Information 3.69%. £740.96pm. £999.00 fee
3. 2YTr_NC SMR Only Information 3.99%. £760.66pm. £0.00 fee

4. 3YTr_NC SMR Only Information 3.99%. £760.66pm. £0.00 fee
5. 2yr Fixed_C Information 4.49%. £794.15pm. £999.00 fee
6. 3yr Fixed_C Information 4.69%. £807.77pm. £999.00 fee
7. 2yr Fixed_NC Information 4.89%. £821.52pm. £0.00 fee
8. 3yr Fixed_NC Information 4.99%. £828.44pm. £0.00 fee
9. 5yr Fixed_C Information 5.29%. £849.40pm. £999.00 fee
10. 5yr Fixed_NC Information 5.49%. £863.52pm. £0.0 fee


I like the look of number 4, 3 years fixed rate at 3.99%, £760pm with no fee. As long as I can overpay that looks okay. It will give me some peace of mind in case interest rates do go up.

What do people think? Also do people think interest rates are likley to rise soon (the big question)?

Cheers

dimbo61

Even the 3 year fixed deal you are looking at would require 3 1/2% rises in the BOE base rate to match 3.99% with your current BMR and with the fragile housing market, long term employment situation, lack of mortgage lending from banks/building societies I think rates will take 2/3 years to increase to normal levels!
But what the heck do I know!!!!
Your decision

Thrugelmir

rosscouk wrote: »

A nice drop which will help the family.

Don't get lulled into a false sense of security. Overpaying a mortgage is far easier when interest rates are low. Best to take advantage of the opportunity now.

rosscouk

Thanks for the replies. Interesting, obviously i don't want to get caught out. But I am stuck in two minds, take a chance and stay on the BMR and pay less or have a little more security and move for something like the three year deal but pay a little more (at current rates around £3600 more).

If interest rates do move, I wonder how fast they would move once they have started. I guess the question is if they move from 0.5% could they move up rapidly. That is obviously what everyone is worried about.

So, the replies so far seem to suggest sticking with the BMR. Any other opinions.
Cheers

Helsen

Im just in the process of moving on to a tracker rate of 2.49+base rate from my fixed of 5.69. Im actually leaving my fix slightly earlier so will incur a small fee but currently a big saving. My plan is to over pay as much as I can over the coming months, whilst keeping an eye on the base rate. Chip away at what I owe, if I think the rates are increasing, then I will look to fix, as i wont be tied in.

littlegreenroundthings

Don't forget that house prices falls will mean your LTV could be a lot lower than what you think come valuation time - we are already 10-20% off peak in summer 2007. Also when rates start going up the speed of falls could be quick, so your LTV could fall further. If there is any kind of financial shock (eg fall in confidence in sterling and UK runs on UK banks) rates could go up over night. In the last crash, plenty of people were paying 15%. I would fix and fix long while you can.

rosscouk

Still unsure, I think I might have a look around and see if I can find any deals for around 3 years, but they would have to beat this I guess.

4. 3YTr_NC SMR Only Information 3.99%. £760.66pm. £0.00 fee

dimbo61

YBS have a 5 year fix at 3.99% fee £995 which would give you longer term security if the costs add up!

Lifes_Grand_Plan

rosscouk wrote: »

my mortgage will be reverting from my 5 year fixed rate at £910 (5.08%) to a BMR 2.5% rate which equates to £665. A nice drop which will help the family.

Did you not take the earlier advice and carry on paying the higher amount to hammer the capital of the mortgage? If not then its a bad move IMHO....

If I was you (and I am you really because my 5.09% five year fix ends in 18 days) then I would have left the payments at the same higher amount you've been paying for the last 5 years and stay on the BMR or a tracker...

My regular payment is about £650 a month but I have been overpaying to the maximum allowed (20%) per month since day 1.

When my fix ends in 18 days i'm paying off a lump sum to get below 70% LTV, switching to a tracker and then increasing my payments to £1000 or maybe even £1100 per month and sitting tight, see when the interest rate increases come... and make no mistake, they will come, just a case of when and how quickly....

ChopperST

Obviously check your individual mortgage product but alot allow unlimited overpayments after your fix has expired as opposed to cappining it to 10 and 20% of the balance outstanding. I'm in the same situation and cant wait until my mortage rate drops to the SVR so I can leave payments the same and overpay!