To fix or not to fix...

ybbon66

Hi,

We are trying to get some stability into monthly finances, after a bit of a black period we have a few things to do.

1. EDF have a fixed price until March 2014 which will cost about £43 more than we currently consume, as I can't see how fuel prices will not comfortably exceed that in the next 34 months I'll sign for that tomorrow (would have done it this weekend but their systems are down). So that is in progress.

2. We have an MBNA card at stupid rate of interest (27.9% I think) on about £6800, in progress to BT this or do something to pay it off entirely.

3. Mortgage is with A&L, they have offered 2 fixed rates, one at 4.79% which would cost about £4 a month more than we currently pay until Aug 2012, or a 5.49% one which would cost about £50 more a month until Mar 2013. Now interest rates are definitely going to rise at some point, the gamble is how much.

Obviously no-one can predict exactly what the interest rates will do exactly, so I'm minded to fix until Aug 2012 at £4 extra and gamble that interest won't rise by much more than that by the end of that fix period. The good news would be that at the end, the variable rate would then be Santander's which is 4.34% rather than my current A&L one of 4.77% - though whether that would be true in a year is also a gamble.

I'm just interested in the final point here, would it be better to pay a bit more on a longer term view or essentially stay the same for a shorter term?

Thanks

kingstreet

ybbon66 wrote: »

Mortgage is with A&L, they have offered 2 fixed rates, one at 4.79% which would cost about £4 a month more than we currently pay until Aug 2012, or a 5.49% one which would cost about £50 more a month until Mar 2013. Now interest rates are definitely going to rise at some point, the gamble is how much.

Obviously no-one can predict exactly what the interest rates will do exactly, so I'm minded to fix until Aug 2012 at £4 extra and gamble that interest won't rise by much more than that by the end of that fix period. The good news would be that at the end, the variable rate would then be Santander's which is 4.34% rather than my current A&L one of 4.77% - though whether that would be true in a year is also a gamble.

I'm just interested in the final point here, would it be better to pay a bit more on a longer term view or essentially stay the same for a shorter term?

Thanks

Why stay with Santander? The offers you are describing don't look particularly good and dropping off a fix in 2012 may be "out of the frying pan."

Are you credit worthy with a good mortgage payment record? What do you owe and what's a conservative estimate of the value of your home?

For example - if you're at 75% LTV or less, you can get a totally fee-free fix for two years from ING at 3.45%. Halifax is next at 3.79%, also fee-free but there's a fee to repay the mortgage when you move it again. Other decent offers out there, even at higher loan to value levels.

ybbon66

credit worthy, dunno, Experian say "fair", there is a default, though on a fully settled account - I've disputed it too but of course it still shows as a default, however I've not missed a payment on the mortgage in the 4 years we've had it.

Mortgage is £154K, house value not what we paid for sure but there are 2 identical houses for sale in the street for £175k and £179K so LTV is going to be something like 88% - and ING don't advertise on that level, Halifax rates are 6.29% and 6.14% for 2/3 year fixed which is worse than Santander.

Still, it's worth looking around a bit more. Halifax is my bank so they may do a better deal (doubtful but I can hope). Thanks for the tips though.

kingstreet

Hm. Halifax products are lousy at that level.

Yorkshire BS is showing competitive products at that loan to value, but the fees could outweigh any savings.

Have a look. It's branch stuff only, so they may not show up online. Product codes are 7596 and 7605