My Current HSBC Mortgage and Interest Rate Rises... Update.

JamesJupiter

Morning.

Some of you may have read my previous post relating to my current HSBC mortgage and whether or not I should consider fixing to avoid any uncomfortable interest rate rises in the coming months

My current outstanding motgage details and rates are below

Balance = £ 55,719.00
Term Remaining = 25 years & 7 months
Current Rate = 3.94% Variable until 28 Dec 2036
Current Monthly Payment = £ 287.20

I spoke to HSBC yesterday and the deal they gave me was a 2 year fix at 5.89% for the initial 2 years, reverting to a variable rate of 3.94%.

I was wondering if anyone could offer any thoughts or helpful advice on this as I'm wondering if I'd be better at the moment sitting tight with my variable as I'm not sure if current rates rise considerably enough to make me look at taking a fix to make my payments cheaper.

Once again, any help or advice is greatly appreciated

casper_g

The 2 year fix they're offering you is almost 2 percentage points higher than your current rate. For it to be worthwhile fixing, rates would have to go up by that amount in the next year or so (if they went up towards the end of the two years, you'd have already been paying more than you could have been for most of the 2 years so it would be too late to get the benefit).

Nobody knows what rates will do, but personally I doubt they'll rise that quickly.

As a side point, what's your current LTV? Knowing this will help people assess whether the rates they're offering are any good or not.

whatyadoinsucka

what is your financial situation ie what is your LTV loan to value ie mortgage compared to a conservative house valuation, also are you overpaying on the mortgage or are you struggling to meet your commitments each month.

HSBC have got variables fee free for 70% LTV at 2.69%, you may be better off changing to a tracker, as they offer unlimited overpayments. if you are risk averse get another fix, but you will pay for it.

personally i'm on a hsbc variable at 2.49% and overpaying 120% each month, so i'm seeing the balance reduce considerably.
hopefully the interest rate rises will not happen for a few more years, but its likely they'll go up over time.
on a 50k mortgage even a 5% rise will only mean you have to pay out an extra £2,500 a year (depending on circumstances £200 extra a month isn't that great)

we need more information to advice for your situation.

Thrugelmir

Can you afford to make overpayments at the current time?

kingster2069

I would need a little more details to give a recommendation, but think if you want a fixed rate I would shop around a little. That rate sounds high to me unless you have a very high LTV or poor credit history with your bank.
I know you are worried about interest rate rises and I'm sorry I can't predict them. But if rates increased by 0.5% every six months over the next two years you'd be no better off financially on the fixed rate on offer.
If you are living hand to mouth then maybe a fixed rate would be good. One way of offsetting some of the risk is to move onto a interest only tracker. If you can bet your current rate and then over put the difference between the tracker and the fixed rate in a saving account. This can then be used to maintain the same payment even if interest rates rise during the period.
Lots to consider, good luck

JamesJupiter

Thanks for the input everyone.

As a side point, what's your current LTV? Knowing this will help people assess whether the rates they're offering are any good or not.

My current LTV is 98% according to the member of the mortgage team I spoke to the other day. Scary! I've had the mortgage since 2006, made a small amount of ground but I guess I'm payng the price for the slump in the housing market around here (West Yokshire)

also are you overpaying on the mortgage or are you struggling to meet your commitments each month

Not at present. The thought of overpaying has been there for a while, however my Girlfriend and I have been saving pretty had over the last year or two to build up a deposit to buy a place together. Any money that I've saved on reduced mortgage payments over the last couple of years has been going straight into savings.

I would need a little more details to give a recommendation, but think if you want a fixed rate I would shop around a little. That rate sounds high to me unless you have a very high LTV or poor credit history with your bank.

My LTV is very high I should have mentioned this in the first part of my post. I don't know a lot when it comes to mortgages, however I was always of the feeling that the fixed rate was quite high so I'm tempted at the moment to ride it out on my variable rate to see what happens.

Whilst I'm no so savvy when it comes to mortgages, I am more than confident that my credit rating is suiable for someone of my age (28) I've never been declined for any credit facility.

I'd just like to thank everyone for their input on this topic, it's greatly appreciated. If the information has put you guys in a better position to offer me some ideas moving forward then please fire away!

Thanks

LilacPixie

A fixed rate may also not be a good option if you are planning on selling upto buy with your girlfriend