End of Fixed Rate - What to do?

bazjonster

Hi guys,

My 2yr Fixed Rate deal with C&G is about to end and they are now giving me the option of taking out another 2yr deal (at a cost of £999!). If I do not take them up on their offer and revert to C&Gs SVR I will be saving a whopping £250 a month! - very tempting indeed. If I take up the new 2yr fixed rate deal I will still be paying £95 a month less than I currently am.

So, what are the risks if I opt for the very attractive SVR? Is it worth reverting to this until such a time as rates rise and then look for a new fixed rate product at a later date? If/when rates do start to rise does that generally mean that the percentage rate of the fixed rate deals on offer rise as well and so that then therefore becomes an inherent risk by virtue of waiting?

Also, if I opt to take out a product with another lender how exactly does that work? I am guessing they will need to value the property so does that mean solicitors have to get involved as if I was buying again?

Excuse my relative ignorance and apologies for quite a long winded post but it seems to be such a minefield out there.

Thanks in advance.

1399steve

Just had the same dilemma myself and opted to go with a 3 yr fix at a rate 2% below my previous rate! Had to pay valuation fee, product fee and legal fees but its worth it cos I'll save that amount in 4 months!

flashg67

I think it's worth getting independent advice but, being in a similar situation, here's my tuppence worth -

My deal expires in June & I'm gonna stick to the SVR, have a bit of a cash boost for a change, but try to put some of my savings (from the cheaper payments) to one side and pay off extra on my mortgage (Nationwide so I can make small overpayments).

If rates creep up, I'll look for another fix. Rates would have to go over 4% for me to be worse of than my current deal that is ending. Hopefully 4% is some way off? It's all a gamble - I fixed last time just before rates dropped, so feel I have been 'overpaying' for ages and need to feel that I'm getting something back!

Cash in the hand now, is to me anyway, better than the possibility of something in the future....;)

pimento

C&G offered me a new 3 or 5 year fix at 4.39% or 4.59% fee free. Or go onto the SVR at 2.5% variable.

Wonder why they want you to pay £999?

My LTV is something like 20%

opinions4u

For what it's worth I'd go on to their SVR and overpay mortgage or other credit by £250 a month. This will reduce future interest charges and get your debt down.

As interest rates rise, try to continue with the overpayments if you can. If things start to get tight, then reduce them, but never to a position where you're paying less in total on your mortgage than you currently do.

The risk in this approach is that rates may go up quickly, and by more than I expect them to. Fixed rates would probably be higher too if that happens. But I think it's a small risk and one that's mitigated by debt reduction now.

Don't just accept the lower payments and fritter your £250 a month away. Focus it on debt reduction (cards, overdrafts, loans and mortgage).

Changing to a new fixed rate will lose you access to their BofE+2% SVR in future.

bazjonster

Really appreciate the advice, thank you.