Help need to make a decision - Fix or ride the wave and track

GEAL

I'm currently on an interest only mortgage deal which is tracking the base interest rate of .5%, so I've been in a very good position and have been paying off £500 a month for a year.

My dilemma is whether to fix now or take the risk and stick with what i have. The decision is complicated by the fact i will be made redundant in a few months and although not a great deal of cash, I want to use this opportunity to have a change in direction, get out of the rat race and take a break.

I will be renting a room which will almost cover half the current costs including bills, meaning i could probably survive for at least 6 months without taking paid work.

So i guess I'm asking for advise on whether to take the risk and stay with what i have, meaning i could always go back to interest only at any point, dependent on how my life pans out in the 6 months from the date of leaving work which is likely to be the end of September.

I currently owe £106,000 over 18yrs, but have at least £140,000 in equity and plan on selling and moving out of the city to a cheaper area where i could reduce the mortgage. So again is it really worth fixing if the rates stay at least below 5% over the next year or so.

An exciting but also scary time and really don't want to blow this.

Any advise would be greatly appreciated.

dimbo61

You have a great mortgage rate and the flexability of interest only so your mortgage payments are low. Are you overpaying by £500 a month ?
Build up savings to help you get by until you get another job or sell your property.
An fix will cost a lot more so stay on your tracker IO deal.
Good luck with the job hunt

GEAL

Thanks for the response. Yes the £500 is the overpayment and the interest is £67 at the moment. My mortgage broker sent me a fixed for 3yrs at 4.99% the to 3.99% for 2, although i understand people want to know what they are paying each month, it didn't seem like a good option for me. I feel I'm being a bit reckless as the redundancy won't go far, but I'm in a position to be able to rent to cover all costs and travel if thats what comes about.

Just have to hope the interest rates do a sudden high dive.

GEAL

meant to read don't do a sudden high dive of course

hillcats

So you are actually paying off the capital with these overpayments?
Does your statement show the balance falling by the same amount each month ?

It is all about your own perception to risk, we are all different based on our own circumstances etc.

dimbo61

You are in a good position re your mortgage payments as you only HAVE to pay £67 a month and even if rates do climb to 4/5/6% you still wont be paying a huge amount each month.
I would still be filling a cash ISA asap which will give you money to live on and pay the IO mortgage but also earn a better rate than you are paying on the mortgage.
Its great paying down your debts but for now I would be building up £16K in savings ( will you get a redundancy package?) to survive on until you find work.