End of fixed rate, these options?

MrD

Hi folks, our 5 year fixed rate ends at the end of next month. Currently 4.59%.

8 years left, £52k mortgage; house worth around £250k

Been offered a couple of options with current supplier:

Tracker 1.5% above base rate no fees. (£572 a month)
2 yr fix at 3.49% £199 fee (£610 a month)
5 year fix 4.59% £199 fee (£636 a month)

Question is, are there better fixed rate deals? I do like the idea of fixing but with the rate so low.......... Had a play with moneysupermarket but couldn't find anything to beat it.


How does the tracker match up?

If only we had a crystal ball to see the rates in the future.......

MrD

Thrugelmir

From the monthly repayments you've quoted. You can see that that the size of your outstanding mortgage means that the interest differential is making a smaller and smaller difference. In that the 2.59% difference between the tracker and 5 year fixed is only £72.

Personally therefore I would take the tracker mortgage. As no-one is forecasting a base rate above 3% in the foreseeable future. So then either overpay the mortgage by £72 or save the money into an instant access ISA with a higher rate of interest. Either way the mortgage will be repaid earlier and you'll be insulated from higher rates of interest that eventually will come.

MrD

Thank you, makes sense.:j

getmore4less

Whats the followon rate of the current deal?
(or is that the tracker?).


I think +1.5% is an OK deal you can get tracker saving at or above this rate or overpay.

MrD

The follow on rate is the tracker that they are offering. Over paying sounds a good option.

getmore4less

OK so it is not really an offer it is the default for the current deal.

The fixes will have overpayment limits.

What are the follow on rate for those fixed deals?

if not Base+ 1.5% or better then you lose that option forever.

dimbo61

That a very good tracker deal and you cant get that from any other lender as HSBC wants 1.89% above base for there best tracker.
So revert to the tracker at the end of your fix and overpay the mortgage by at least £72 a month.
If you can afford too I would also be building up savings in cash ISA,s paying 3% or more

MrD

getmore4less wrote: »

OK so it is not really an offer it is the default for the current deal.

The fixes will have overpayment limits.

What are the follow on rate for those fixed deals?

if not Base+ 1.5% or better then you lose that option forever.

Follow on for the fixed deals are higher than the tracker but I cant remember the exact amount.

Looks like the tracker might well be the best bet for the time being with the overpayment.

Thanks folks.
D